Why Bay Area gas prices are so high

0 Comments | Oakland Tribune, Mar 16, 2007

Your readers have probably been asking why gasoline prices have gone up recently in California. Here is some information that may be helpful.

Experts such as the U.S. Energy Information Administration explain that the major elements comprising the price of gasoline are crude oil costs, refining costs, marketing and distribution costs and taxes. U.S. spot prices for crude oil have increased more than 20 percent since mid-January.

Recent price increases have also been the result of supply and demand factors, according to the California Energy Commission (CEC). That agency reports gasoline supplies have dipped because some refiners have had difficulties returning to full production after transitioning from winter- to summer-blend gasoline as required by law.

When supplies are reduced, as has occurred recently, there are no pipelines to bring replacement gasoline quickly into our state. Imports are required.

California is an energy island and all our imports are delivered by vessels, which is a relatively slow and costly way to augment these reduced supplies. This, according to the CEC, introduces even greater volatility into the gasoline market place.

Many consumers also want to know why prices in California are generally higher than the rest of the country. First, California drivers pay among the highest gasoline taxes in the country. Another significant reason, according to the CEC, is that California gasoline, which is the cleanest in the world, costs more to produce.

Joe Sparano

president, Western States

Petroleum Association

Sacramento