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State seeks answers in gas price spikes
Key Excerpts from Article on Website of San Francisco Chronicle (SF's leading newspaper)
Posted: November 19th, 2012
http://www.sfgate.com/business/article/State-seeks-answers-i...
October's record-setting jump in gasoline prices cost Californians $320 million, and yet state officials lack some of the basic information needed to ensure that refineries aren't playing games with the fuel market. That was the testimony [on November 15] at a hearing that explored the causes of the price spike, which saw the state's average price for a gallon of regular reach $4.67. The hearing could lead to legislation. With its own specialized gasoline blends made by just a handful of refineries, California has long been prone to price spikes. But four of the most severe on record happened in 2012. The October price spike began after an electrical outage suddenly shut down an ExxonMobil refinery in Los Angeles County. Fuel supplies in California had already been strained by the Aug. 6 fire at Chevron Corp.'s Richmond refinery, as well as the closure of a crude-oil pipeline in the Central Valley. Severin Borenstein, director of the University of California Energy Institute in Berkeley, noted that the state's reliance on just a few refining companies gives those businesses significant power over the market, even if they don't conspire to raise prices. No pipelines connect California to refineries in the Midwest or on the Gulf Coast, leading many analysts to label the state an "energy island." "Unfortunately, we've created a situation in the California market where because we're an island and because it's pretty concentrated, we actually do have companies that are in a pretty strong position to raise prices by putting less (gas) on the market. There is no law against them doing that," [Borenstein said].
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