Dan Walters

Opinion: Senators try to make refiners scapegoats on gas prices

As its 24.6 million licensed drivers know all too well, California gas prices have been going up and down like a supercharged yo-yo in recent months.

From about $4 a gallon late last year, prices plunged to below $2 in many areas as global crude oil prices plummeted.

They then jumped back to more than $3 when a variety of factors simultaneously hit supplies and prices of the state’s uniquely formulated, smog-fighting gasoline: an explosion at a Southern California refinery in February, a national refinery labor dispute, rebounding crude prices and application of state “cap-and-trade” carbon emission fees to fuel.

More recently, during the last week or two, prices have drifted downward again to below $3 at many stations.

On Tuesday, two state Senate committees staged a hearing on California’s gasoline market, working off a background paper prepared by a legislative staffer.

Such a report should have fleshed out the ups and downs of the market as described above, offering factual and authoritative information about why the gyrations occurred.

No such luck.

The report’s title – “Up Like a Rocket, Down Like a Feather” – reflected the clear bias one could find within its seven pages. It focused almost entirely on the price increases since February, disregarding both the dramatic plunge in prices prior to then and their more recent downward trend.

It basically was a hit piece, implying that prices had been manipulated by refiners. It minimized the cap-and-trade effect, the impact of the state’s unique formula on supplies during refinery disruptions and the global commodities market. It suggested that the attorney general’s office could, as some senators have sought, “open an investigation into gasoline market price manipulation.”

The committee chairmen, Ben Hueso and Jim Beall, showed similar biases. Beall decried prices “much higher than prices around the rest of the country,” while Hueso labeled price spikes “unjustified.”

The committee also heard a scattergun harangue from Jamie Court, head of Consumer Watchdog, which issued its own report alleging price manipulation.

Fortunately, however, Gordon Schremp, a fuels expert for the state Energy Commission, provided an objective analysis. He cited unexpected outages of refineries, the commodities market, California’s being an “energy island” and other factors.

To honor their supply contracts, Schremp said, refiners are buying fuel from out-of-state suppliers and blending it to meet California’s standards – just as they are also making a mandatory shift from a winter formulation to a more expensive one for the summer.

Schremp’s comprehensive analysis was a stark contrast to the senators’ one-sided effort to make refiners scapegoats – an effort that tarnished the Senate’s much-vaunted spate of “oversight” hearings.

Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.

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