Quit Whining About Gas Prices

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It’s amusing that both California senators are outraged – outraged! – that gasoline prices surged so high this month.

You may have read that Sen. Dianne Feinstein called on the Federal Trade Commission to probe “malicious trading schemes in the California gasoline market.” Not to be outdone, Sen. Barbara Boxer quickly followed, urging the Justice Department to open a separate investigation. She huffed that Californians have been victimized by “unscrupulous traders.”

They’re angry, and they want investigators to look at trading records, to look at suspected manipulation, to look anywhere they need to look to find the dastardly culprits of these high prices.

Of course, the senators could find the culprits easily enough. All they have to do is look in the mirror. California’s politicians have created a set of policies, rules and taxes virtually designed to have one effect on gasoline prices: drive them up.

Hey, for that matter, are you complaining about gas prices that are higher here than anywhere else in the country? You should look in the mirror, too. This is what you wanted.

The state created strict fuel regulations that are unlike any in the country. What did you think that would do? It made California’s gasoline more expensive to make, and that additional cost gets passed on to the buyers.

But that’s just the start. Since California requires special blends, only a relative few refineries – 14 in all – bother to do it. That means California has its own closed fuel system: We can’t easily import others’ cheap fuel and they don’t want to buy our expensive, unique fuel.

As a direct consequence of these conditions (along with California’s high per-gallon tax at the pump), motorists in this state pay about 20 cents or 30 cents extra a gallon as a routine.

But life in any closed little system carries an inherent risk: Any disruption causes more problems than it would in a larger system that has more flexibility. A disruption happened in August when a fire struck a refinery in Richmond, one of the state’s largest, followed by power outage early this month at the Exxon Mobil refinery in Torrance. The result was an immediate shortage – or the fear of one – and motorists earlier this month paid an extra 80 cents or more a gallon.

Many of the state’s stringent gasoline requirements were designed to clean up the air. That’s fine, and the cost of cleaner air may well be worth the higher price of gasoline. But please don’t pretend cleaner air and all the regulations that go with it come at no cost and carry no risk. Please don’t act surprised when California’s prices get out of whack with the rest of the country. This is the system that politicians pushed and voters approved. The responsibility is ours.

At least there’s some amusing theater. Whenever prices go up, you can count on politicians to get huffy, eschew all responsibility and thoroughly thrash the straw man of the “unscrupulous trader.”

Kind of reminds you of the old saying: Who’s to blame? It’s surely not thee. It’s surely not me. It must be that fellow behind the tree.

For much of this month, California has had the highest gasoline prices in the country, even higher than Hawaii. And Los Angeles has among the highest prices in the state. Just last week I spotted a station on Olympic Boulevard with a posted price of $5.09 a gallon – for regular, not premium.

Prices may go down. But alas, perhaps not for long. Next month, the state’s cap and trade system begins. (See the op-ed at the top of the next page.) Some analysts expect that will push up gas prices more. And if it does, we may in a year or so look back on that $5.09 a gallon as the good old days of low prices.

And if prices do go up, please don’t complain. It’s part of the system that politicians pushed and you voted for.

Charles Crumpley is the editor of the Business Journal. He can be reached at [email protected].

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