Oil & Gas Stories

Wall St. Journal

October 18, 2012

CALIFORNIA'S GAS PRICE: IS THERE A VILLAIN?

Prices at the pump shot to a record average of $4.67 a gallon across the state, up from $4.17 the previous week. Some gas stations, unable to get supplies, closed. Since then, the price has inched down to about $4.55 a gallon.  But two other factors put California in a pinch long before February. The state is an isolated market. Ships deliver oil to California's refineries, which then make gasoline and pipe it throughout the state and to neighboring Nevada, Arizona and Oregon. There is no major pipeline or rail infrastructure that can quickly deliver large amounts of gasoline or oil from other locales in the U.S. to California—supplies that could mitigate shortages.  How isolated is California? While the rest of the U.S. is consuming less imported oil and more domestic shale oil from fields like the burgeoning Bakken in North Dakota and Eagle Ford in Texas, California is importing more oil from countries such as Ecuador and Iraq—now up to roughly half of what it consumes.

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The article is somewhat misleading.  Gasoline can't really be shipped into CA from other states unless the refinery changes its product to comply with CA requirements (unique within the US 50 states), which is unlikely.  So we are truly stuck, and at the mercy of the in-state refineries.  The Chevron refinery that caught on fire a few months ago will be down for some time, so it won't get much better.

Steve P--- Is  that not  the problem-- you would think Ca would loose up some of their regulations. Plus there has not been a new refinery constructed in the USA in > 30 years. You can not get the WTI Crude to the refinery in Ca. they have to get supplies from imports at higher prices. I think Ca is your home state so what if anything can be done? Ca does allow you to drive into the state with a full tank of gasoline from other states they do not meet Ca Regs

i am an interloper her in CA, and have no confidence that the folks here, citizens and politicians alike, will change the regs to allow "normal" gasoline into the state. it was briefly discussed, but dismissed. they truly do see the world through a different set of lens out here.

Adubu, as Steve said the issue in California is the special blend gasoline that is unique to the state.  So any interruption in production by a California refinery creates an immediate shortage.

 

The West Coast actually imports less of its crude oil supply (51%) than the rest of the US (63%).  The largest suppliers of imported crude oil to the West Coast are Saudi Arabia, Canada & Ecuador in that order.

 

There will not be any change as California government officials do not live on this planet and continue to mislead the residents.   

Les B ---I understand the Ca issues as Steve outlined which you confirmed with your last sentence "the Ca Gov do not live on this planet" If they would allow some permits for  a few new refineries  Ca could enjoy gasoline closer to USA avg price per gal. But then again they would just use the opportunity add addition Taxes on the gasoline

Comes from breathing too much smog.

Got same problem in North East due to refineries can not get lower price crude to maintain any profit margin with all the Regs.on old refinery so they just shut down  

"it comes from breathing too much smog" ... that's close to accurate. I have a former Californian for a friend. He was telling me about the pollution problems in the big cities and the laws passed to clean the air.

These laws and blends were in response to visible, breathable smog - not nearly as bad as in China, but almost everyone who remembers that old 50's-70's smog in Calif is worried it can return.

There were a lot of things that happened under the Clean Air Act or some such legislation. Some good, some bad, but you never hear about Acid Rain anymore or see photos of huge dark clouds over American cities.

Everyone's clothes got smog on them and in some areas it was like black dandruff. People did not like that grey/black dust on their clothes and it was also visible evidence of what they were breathing.

PS: my gas comes from Calif and I am paying about $4. a gallon now for regular. I am mad as hell about it because we could have more pipelines, more refineries and oh yes, more natural gas!

i live in the Bay Area, but 30 miles S of SF, and there are few air quality issues. CA fancies itself as a leader in all things, including all things environmental, so a number of years ago it developed seasonal blends of gasoline that emitted fewer emissions. the thinking was that since, obviously, people here are so much smarter than everybody else tht other states would fall in line and adopt those same standards so it wouldn't be an issue. no other state followed, so now we are an "island" for gasoline, and we pay the price, literally.

Acid rain was caused by coal plant emissions, which were substantially alleviated by an agreement between the US and Canada under the Reagan (the Great) administration. well, the emissions weren't alleviated, but the sulphur content was reduced

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