From Econbrowser: California gas price spike

James Hamilton at Econbrowser explains the recent 50 cents a gallon spike in California gasoline prices.

  • California prices are usually 30-40 cents a gallon higher than the rest of the country
  • About 20 cents is due to higher gasoline taxes
  • Much of the rest is due to the use of higher quality gasoline to reduce air pollution

The latest spike had several causes.

  • The fire at the Richmond refinery in August
  • The closure of Kettleman-Los Medanos pipeline due to contamination
  • A power outage that shut down ExxonMobil’s  Torrance refinery in Los Angeles.

Price volatility is also significantly greater in California because it requires a different blend to meet air quality standards and the California oil market is relatively isolated (see map below).

(Read the article)

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1 Comment

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One response to “From Econbrowser: California gas price spike

  1. Unfortunately we won’t find out what really happened until 10 years after the fact. See http://www.consumerwatchdog.org/newsrelease/internal-memos-show-oil-companies-intentionally-limited-refining-capacity-drive-gasoline for an eariler go-round. While reducing gas consumption is a good thing,for all kinds of reasons, low- and moderate-income consumers get creamed by high gas prices. We often live in neighborhoods underserved by public transit, cannot live near where we work because rents in places with jobs are unaffordable and, if we have more than one job, must drive to travel between jobs.

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