California’s Green Gas Shortages

“Gas prices in California have soared by 55 cents in a week to an historic high of $4.65 per gallon, about 84 cents higher than the national average. The immediate cause was a power outage at an Exxon refinery in Torrance. A Chevron refinery in Richmond that caught fire in August has also been operating at reduced capacity. The resulting fuel shortage has forced wholesalers to ration deliveries, and retailers that buy on the spot market to close.

“This gas crisis is self-inflicted, like so many problems in the state. Because California’s fuel regulations are the most stringent in the country, the state is isolated from other energy markets. Few refineries in the world can produce the unique reformulated gasoline blend that the state requires, and almost all are located in California.

“Over the last two decades four refineries in the state have shut down rather than invest in expensive upgrades to comply with fuel regulations. The biggest killer was a 2002 ban on the additive MTBE, which refiners had to replace with ethanol. The California Air Resources Board has estimated that this reformulated blend adds five to 15 cents to the cost of every gallon of gas, but Californians pay a premium whenever a refinery shuts down.

“The 14 refineries in California that blend its special fuel operate at nearly full capacity. So when a refinery experiences an unexpected outage or even routine maintenance, others can’t pick up the slack. And since importing the fuel via tanker can take up to six weeks, Californians are usually stuck paying higher prices until the refinery comes back on line.

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“The cost of [looming carbon-penalizing] environmental regulations, which is baked into everything Californians consume, is one more reason that jobs are leaking to other states. In related news, Environmental Protection Agency chief Lisa Jackson says California is her model for the nation.”