Malo periculosam, libertatem quam quietam servitutem.



October 2012

California's Self-Imposed Gas Crisis

Written by , Posted in Big Government, Energy and the Environment

California shoots itself in the foot again with its overzealous regulatory culture:

Drivers in Southern California awoke Friday to find that their gasoline prices had spiked by nearly 20 cents a gallon overnight as a result of fuel shortages caused by a series of refinery disruptions in recent weeks.

Supplies of refined petroleum products on the West Coast are now at their lowest levels since 2008, while national inventories are about normal.

The immediate cause of the California price rise was a power failure at Exxon Mobil’s Torrance, Calif., refinery on Monday that shut down some production units at the 150,000-barrel-a-day facility. The company on Friday said the refinery had resumed normal operations. Supplies on the West Coast had already been tight because of an Aug. 6 fire at Chevron’s 245,000-barrel-a-day Richmond, Calif., refinery, which has still not been restored to full production.

Fires and power outages, surely I can’t be blaming the government for that, right? Well, no, but keep reading:

California typically has substantially higher gasoline prices than most of the country because of its tough environmental regulations and high taxes. Gasoline supplies are traditionally tight this time of year as refiners do maintenance work to switch from summer to fall gasoline blends mandated by the California pollution-reduction regulations. But this year, energy experts say, the local gasoline market is particularly chaotic because of the refinery shutdowns.

So here’s the thing. Supply disruptions happen in lots of industries. A localized disruption in a single state wouldn’t normally cause such shortages, but in this case, government is both contributing to the disruption itself – through the alternating mandated blends – and the inability for it to be resolved through reallocation of supply. Specifically, the reason California is seeing no relief from the rest of the country, which is not experiencing any shortage, is because California’s government says those supplies aren’t good enough.

Perhaps they are right and the costs are justified, but Californian’s should understand that this is the price to be paid for their environmental regulation. They aren’t just abstractions or imposed only on evil oil refiners, but instead place real burdens on ordinary Californians struggling to fill their tanks to get to work each day.