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Why gas prices are still high [Google+ Hangout]

October 22, 2012|By Pat Benson

California gasoline prices have dropped by an average of 24.4 cents a gallon since hitting a record for the state on Oct. 9. But they are still way higher than they were a year ago.

Join us for a live video discussion at 2 p.m. PDT about where gas prices are headed, and why they are still 56.5 cents a gallon higher than the previous record set Oct. 22, 2011.

Consumer columnist David Lazarus will talk to Ken Bensinger, who wrote in Monday's Los Angeles Times that California has about half the number of refiners it had in the early 1980s. They will be joined by energy editor Nancy Rivera Brooks.

Bensinger writes that oil companies operate what amounts to a legal oligopoly in California. From his story:

"That's because the Golden State's gasoline market is essentially closed. The state's strict clean-air rules mandate a specially formulated blend used nowhere else in the country. Producers in places such as Louisiana or Texas could make it, but there are no pipelines to get it to the West Coast quickly and cheaply. As a result, virtually all 14.6 billion gallons of gasoline sold in California last year were made by nine companies that own the state's refineries. Three of them — Chevron, Tesoro and BP — control 54% of the state's refining capacity.

"We live on a gasoline island," said Gordon Schremp, a fuels analyst at the California Energy Commission. "The control refiners have is an artifact of the closed marketplace we've created."

Today, the average cost of a gallon of regular gasoline in California is $4.427, according to the AAA Fuel Gauge Report.

Read more about the latest gas price report here. We invite you to join in the discussion on gas prices by leaving your comments below.


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