As California's Gas Prices Hit $4.67, The Governor Steps In

October 8, 2012

If you live in California, you're already accustomed to high gas prices, but to see those prices surge more than $1 per gallon in a week? That's extreme, and Governor Jerry Brown is now trying to reverse the trend.

On Friday at Green Car Reports, we mentioned that California's gas prices were on track to surpass the state's previous high-water mark of $4.61, set in 2008. Over the weekend, they did just that: the average price for a gallon of regular unleaded in California currently sits at $4.67

Elsewhere in the country, the average price of gas is $3.82. That's 42 cents more than we were paying at this time last year, but still better than in the Golden State.

Why are Californians coughing up so much for gas -- both now and in general? There's more than one reason:

1. Infrastructure: As Bloomberg notes, California is physically separated from most of America's major oil pipelines. That makes getting oil to California's refineries more complicated, which results in consistently higher gas prices.

2. State laws: California has stricter (and some would say higher) automotive standards. The state keeps a close eye on fuel economy, requiring car companies to go above and beyond the minimums established elsewhere in the U.S. California also has very specific gasoline blending requirements for refineries in order to keep pollutants to a minimum. Add that to the infrastructure issues mentioned above, and the base price of gasoline goes even higher.

3. Technical problems: Because of items #1 and #2, California's fuel system is already stretched, so the last thing we'd want to see is a crimp in the production line. Unfortunately, that's happened: according to the New York Times, a fire at a Bay Area refinery and a power outage at another one outside of Los Angeles have caused a slowdown in fuel supply. And as we all remember from Economics 101, when demand remains constant and supply decreases, prices climb.

4. Time of year: By now, many refineries have curtailed production of summer blend gasoline in preparation for the switch to winter blend. When production slows, supply decreases, causing prices to rise. In some parts of the U.S. -- often the colder parts -- the changeover to winter blend begins as early as September 15, but in sunny California, that doesn't happen until November. Because summer blend is pricier than winter blend, and because it's harder to come by in the weeks before the changeover, prices often jump at this time of year.

Add up items #1 through #4, and you've got the formula for a perfect storm of gas-price hikes. Now, California's government is stepping in to address the problem.

Over the weekend, Governor Brown told the California Air Resources Board to initiate emergency measures to bring down the price of gas. One of those measures involves authorizing California's refineries to switch immediately to winter-blend production. And just to make sure that there's no monkey business afoot, U.S. Senator Dianne Feinstein has asked the Federal Trade Commission to investigate the cause of California's current high gas prices.

Whether the Governor's actions will bring about a rapid decline in California's fuel prices is debatable. For example, even if winter blend were to roll out today, California still has infrastructure issues and restrictive laws that keep gas prices high, and the aforementioned Bay Area refinery still isn't operating at 100% capacity. 

Do you live in California? If so, how are you dealing with the high cost of gas? Traveling less? Carpooling? Taking mass transit? Drop us a line, or let us know in the comments below.

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