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Little Reprieve From High Gasoline Costs

Energy: The state attorney general urges more competition and conservation to stem the rising prices at the pump.


California motorists can expect chronic pain at the pump because of a lack of competition and inevitable refinery disruptions unless ways are found to open up the market and increase the supply of gasoline, state Atty. Gen. Bill Lockyer said Monday.

Separately, the U.S. Energy Department warned that recent spot prices for gasoline suggest a spike may be on the way to California, but that the rest of the nation should enjoy declining prices this summer.

In presenting a report from his gasoline-price task force, Lockyer said California should consider such actions as creating a strategic gasoline reserve to ease supply shortages, developing plans for supply pipelines, increasing the number of independent gas stations and supporting proposals that would allow branded dealers to buy products from new sources.

"The price spikes that sent pump prices soaring last year and again this year to above $2 a gallon in some parts of the state erode the competitiveness of California businesses and reduce the real income of Californians," he said.

"It would be unrealistic to suggest there is a quick fix or simple solution. What we need are major strides in making California's gasoline market competitive, finding ways to increase supplies and become more aggressive about fuel conservation."

California air quality regulations require a unique blend of cleaner-burning gas that is produced by few refineries outside the state, so any problems at California refineries can send prices soaring. In addition, only six companies produce and sell more than 90% of the state's gas.

The Energy Information Administration, an independent forecasting branch of the Energy Department, said Monday that average gasoline prices peaked at $1.53 a gallon nationwide and should average $1.40 to $1.45 a gallon this summer. This marks the second downward revision in its monthly forecast since the EIA predicted in March that gas could top $1.80 a gallon this summer.

But gas prices could rise again in California, the EIA said, citing recent refinery disruptions that have pushed spot prices higher.

"Unless these spot prices head back down soon, consumers in California will be seeing fairly robust price hikes at the pump over the next few months," the agency said.

The EIA said the U.S. average price of self-serve regular gasoline rose 3.5 cents to $1.455 a gallon in the last week--the first increase in seven weeks. The California average price fell 1.6 cents to $1.658.

The EIA based its prediction on recent lower oil prices, which have been declining since the Organization of Petroleum Exporting Countries boosted production April 1.

However, the EIA said the summer outlook is uncertain, which was underscored by higher oil futures prices Monday. West Texas intermediate crude for June delivery settled at $28.09 a barrel, up 80 cents.

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