How California chooses higher gas prices
California Senators Diane Feinstein and Barbara Boxer are calling for Congressional investigations into the staggering rise of gas prices in California, which have exceeded $5.00 per gallon in some areas. Bring it on. A fresh round of hearings that spotlight the adverse effects of California’s liberal energy policies, the same policies Feinstein and Boxer have pushed for nationwide, would provide the Romney campaign with a fresh exhibit to highlight yet another regressive component of the recently coined “economy tax.”
As you can see from the map above, California’s prices vastly exceed the rest of the country. To ease the price point, Governor Jerry Brown is permitting a cheaper winter fuel mixture to propagate through the market several weeks before California’s usual end-of-October deadline, a tacit acknowledgment that environmental regulations do drive up costs and hurt economic activity. The rest of the country makes the move to the cheaper mixture on September 15th, some six weeks ahead of the Golden State, which means California is chasing a limited supply. This problem was further exacerbated when two refineries went offline due to emergencies and maintenance.
Referring to a price hike on oil sold to Tesoro Corp refineries during this shortage, Senator Feinstein channeled her inner Dr. Seuss, “Was this a squeeze? We do not know.”
On the contrary, Diane, we do, we know.
Asking this question now as the average gallon of gas in California bumps fifty cents to $4.67 is dancing around the edges. Interference from the EPA, the Department of the Interior, Congressional Democrats, and California’s strictest-in-the-nation environmental regulations has squeezed supply and distribution channels for decades. In addition to this, demonization of oil has prevented offshore drilling, halted new refinery construction, and stonewalled new pipelines in a state geographically removed from the main refining centers and pipelines flowing through the rest of the country.
Proving that an understanding of basic economics is not one of the constitutional requirements for holding office in the Upper Chamber, Feinstein sent a letter to FTC Chairman Jon Leibowitz, accusing him of “failing to take action to protect California consumers from malicious trading schemes in the California gasoline market.”
The only malicious trading scheme in the California gasoline market is the environmentalist pact to trade economic productivity for hypothetical one-degree drops in global temperatures over the next century. The only action that can protect California consumers is to free up their energy markets and reduce bottlenecks in refinement. Since that might involve voting Republican, expect the economic masochism to continue as Californians stuff another 55 electoral votes into Obama’s pocket.
While parts of California have busted through $5.00 per gallon gasoline, the national average is currently at $3.89 per gallon. Both are higher than necessary. At the federal level, the Obama administration has assaulted and impeded traditional fossil fuel development at every turn, continuing a tradition going back to the 1970s. The litany of obstacles such as Ken Salazar’s court-defying moratoriums on drilling and Obama’s tabling of the Keystone pipeline become unnecessary to recite. Why? Price tells us everything.
The national average price of gasoline is now $3.89 per gallon. In February of 2009, in Obama’s first month in office, the national average price of gasoline was $1.86 per gallon. Since that lowpoint in price is attributable to the financial collapse at the end of 2008, let’s move forward to June 2009, when economists designated the recession as over. The national average held steady around $2.60 per gallon, which still shows a steady escalation of fifty percent over the last three years. A similar upward trendline appears from when Democrats took control of Congress in 2007 to the 2008 collapse of Lehman, with prices in that span rising from $2.11 to a peak of $4.12.
For comparison, in 2006 when the war in Iraq was raging and the global economy was accelerating, gas prices hovered between $2 to $3 per gallon.
Turmoil in other parts of the globe adds to the upward pressure, but Obama has done nothing to mitigate or insulate the country from these threats. Global disruptions to the world’s oil supply are one Libyan uprising or Iranian conflict away.
Romney has addressed this by calling for North American energy independence. Amidst the current rise in global instability, tightening relations with our northern and southern neighbors by intermingling and immunizing our economic bloodstreams seems prudent. True energy independence in the economic sense isn’t possible in a global market, but an expanded web of redundant pipelines, more offshore drilling, and new and expanded refining capacity would make North American gas prices less susceptible to terrorist attacks, natural disasters, and human error. Such redundancy, the kind being called for on our electrical power grids, would blunt the type of price spikes wracking Californians.
There’s no need for California’s energy problems to become America’s. Yet Democrat environmentalists entrenched in the Washington bureaucracy push the federal government toward enacting the same policies that leave Californians vulnerable to even minor disruptions in supply. When this happens, rising gas prices inflate the price of every other product in the market, as virtually every industry relies on gasoline to transport its workers and ship its goods. It is the ultimate regressive economic tax on the poor and middle class.
America will rise and fall with its energy industry. It’s no coincidence that California’s own collapse coincides with its unwillingness to produce enough energy to thrive. Californians have no one to blame but themselves. This November, the rest of the nation will decide whether or not to join them.