Rising gas prices in California temporary

By and
November 6, 2012

Californians have seen a drastic rise in gas prices over the last couple of months due to gas shortages after a power outage at the Torrance ExxonMobil refinery and a fire at the Chevron refinery in Richmond. (Annie O’Hare)

In an effort to slow rising gasoline prices in California, Governor Jerry Brown told the California Air Resources Board on Oct. 7 to let oil companies sell winter blend gasoline before the regularly permitted date, Oct. 31. Speeding up the use of winter blend gas increased supply and lowered costs by approximately 50 cents from Oct. 8 to Oct. 29.

“Gas prices in California have risen to their highest levels ever, with unacceptable cost impacts on consumers and small businesses,” Brown said in an Oct.7 statement. “I am directing the Air Resources Board to immediately take whatever steps are necessary to allow an early transition to winter
blend gasoline.”

The rate of increase in gas prices rose sharply starting on Oct. 1. due to a limited supply immediately caused by a power outage at the Torrance ExxonMobil refinery on Oct. 1. A fire at a Chevron refinery in Richmond and a Chevron pipeline shut down in Bakersfield between Aug. 6 and Sept. 19 also contributed to the shortage.

According to an Oct. 7 article in the Wall Street Journal, gas prices rose by 55 cents in a week, bringing average prices to $4.65 a gallon, 84 cents higher than the national average.

According to Zohreh Niknia, Assistant Professor of Economics at Mills College, winter blend gas was already being processed in various refineries across America, so there were no extra costs to bring it to California sooner than the normal Oct. 31 date.

California has stringent criteria in place regulating the the production of gasoline and has a ban on the additive methyl tert-butyl ether (MTBE), which is a volatile compound used to increase the octane content of gas. MTBE has been banned within the last ten years after it was proven to be a
groundwater pollutant.

Beth Kochly, Assistant Professor of Chemistry at Mills, said the winter blend is the cheapest form of gas being produced. It takes less time to refine than the summer blend because it does not have to be as pure.

The winter blend contains more butane than summer blend and, when burned, releases more pollutants in the air. It also leads to more CO2 being put in the atmosphere, according to Kochly.

Commuters will most likely face these higher gas prices for only a short time as the gas supplies return to normal in the coming months.

The demand for gas is much higher in the summer because more people choose to drive and take vacations during that time, which drives up prices, Niknia said. A cleaner blend is used in the summer to offset the rise in pollution from an increase in car usage.

The summer blend was also created for warmer weather, meaning that it has to be cleaner for it to burn efficiently. There is also less butane present in the summer blend, which evaporates quickly.

“The summer version of gasoline is marginally more efficient by a few percent,” Kochly said. “However, the money that you save on getting better milage doesn’t outweigh the cost of gas.”

Niknia said that the hike in gas prices is only temporary and will be relatively normal once the effects of the refinery and pipeline accidents have passed.

The recent rise in gas prices have not affected California’s economy significantly. James Hamilton, an economist at the University of California, San Diego, was quoted on Oct. 11 in the Sacramento Bee, saying that the refinery and pipeline accidents were not a nationwide problem and there was an immediate solution to California’s gasoline shortage.

Niknia said that consumers have had to budget their money differently because of the rising gas costs, but because the increase was temporary,  people have not had to consider long term changes.

Reuters reported that the Chevron Richmond refinery will be shut down for the rest of the year, while NASDAQ reported that the Torrance ExxonMobil refinery will continue operations and the fire did not affect production.


Rising gas prices in California temporary was published on November 6, 2012 in News

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