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High Gas Prices

August 17, 1986

Present prices for unleaded gasoline in California defy logic and suggest state gasoline refiners and retailers are unduly benefiting from increased demand and are charging us too much. As a believer in free enterprise, I appreciate their business philosophy. As a gasoline consumer, I resent the excessive profiteering.

The average West Coast pump price for unleaded gasoline has declined in the past year to 97.3 cents a gallon from $1.206 (Oil & Gas Journal, July 30), a 19.3% decline. Average pump price in the rest of the United States has declined to 79.1 cents per gallon from $1.188, or 33%.

Californians are presently paying more than 18 cents per gallon more for their gasoline than the rest of the nation. The ratio of crude oil prices between California crude and West Texas crude has decreased during the past year, meaning feedstock costs for California refiners have decreased, compared to that of other refiners. Thus, profit margins of California refiners must have increased.

Several months ago, a Times article suggested that higher gasoline prices in Southern California were a result of several crippled local refineries, thus putting gasoline in short supply. This "temporary" condition has stretched into months.

According to the API refinery report, West Coast refineries are operating at 80.4% of capacity, compared to 84.1% for the rest of the nation. Eight months ago, before the drastic drop in gasoline prices, West Coast refineries were operating at 77.5% of capacity.

West Coast gasoline stocks of 23 days of refinery output is consistent with the rest of the nation. Crippled refineries cannot now be used as a rationale for higher gasoline prices.

Californians use about 40 million gallons per day of gasoline. The 18 cents per gallon excess charge is costing California consumers more than $2.5 billion per year.

It would feel better if this surcharge were going to California crude oil producers instead.



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