The California Energy Commission reported Tuesday that refinery problems, congestion at the state's oil-receiving seaports, and increased exports to Nevada and Arizona helped cause record statewide gas prices from May through July.
In spite of its detailed report, the commission said it wants more information on the California earnings of oil companies to determine whether any price-manipulating behavior was involved in the hikes.
Oil industry officials said they weren't surprised by the report.
Joe Desmond, undersecretary for energy affairs at the California Resources Agency, said the evidence showed that market forces were responsible for the price spikes this spring. The energy commission is part of the California Resources Agency.
"The market is behaving in a way the market is expected to behave," Desmond said in a telephone press conference after the report's release.
The report said four reasons caused California consumers to pay an extra $1.3 billion at the pumps from May through July:
- Refinery problems and unplanned outages lowered state gasoline production to the lowest levels in five years.
- California marine port congestion increased in late April, delaying the arrival of gasoline and diesel imports.
- Gasoline and diesel shipments to Nevada and Arizona were the highest in five years.
- Prices of materials used in gasoline refining increased.
It also said the number of unplanned refinery problems tripled to 175 for the first half of this year compared to 58 during the same time period last year. It said the refinery problems averaged 9.2 days this year compared to 5.3 in 2005. Also, it said dock congestion caused some tankers to take three to five days to unload compared to the usual one day.
Since California refineries usually produce just enough gasoline to meet demand, commission officials said, these four disruptions to supply could explain the price spikes.
Anita Mangels, spokeswoman for the Western States Petroleum Association, said the oil industry wasn't surprised. The association is a trade group representing 36 oil-related companies in Arizona, California, Nevada, Oregon and Washington.
"The (commission) confirmed what the (association) has opined all along, that market forces were the cause of recent gasoline price volatility in California," she said.
Oil industry officials are far from done with state investigations. Commission officials said this report dealt only with the physical factors in price spikes and that it was gathering more information from oil companies.
More significantly, the California attorney general's office said it has expanded its gasoline prices investigation to include unfair and unlawful business practices instead of the usual anti-trust issues. Tom Dresslar, a spokesman, said the agency had asked for more specifics on oil company finances and was interviewing chief executive officers of all the major California oil companies.
"The oil companies should not consider themselves exonerated by the oil report today," he said.
In North County, the price for a gallon of regular unleaded gasoline dropped almost 5 cents Tuesday to $3.21 compared to prices two weeks ago, according to a Utility Consumers' Action Network survey conducted for the North County Times. The latest decline means local prices have dropped about 10 cents in the last month.
The area price is about 4 cents lower than prices in Los Angeles and about the same as Chicago, Ill., the two highest prices in the country. North County's $3.21 price is about the same as the California average price and almost 21 cents higher than the $3.00 national average, according to the U.S. Energy Information Administration. Nationwide, the average price of gas dropped almost 4 cents from last week.
Light, sweet crude oil prices dropped $3.26 from last week to close at $73.05 on the New York Mercantile Exchange. Light, sweet crude oil is the most desired because it is easier to refine into gasoline than medium or heavier crude oils. Historically, oil prices are lower than when they came close to $98 per barrel in December 1979 in today's money after adjusting for inflation.
- Contact staff writer Patrick Wright at (760) 739-6675 or e-mail pwright@nctimes.com.
On the Net:
www.energy.ca.gov/consumerfuels/
Posted in Business on Wednesday, August 16, 2006 12:00 am Updated: 4:34 am.
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