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Tue Oct 11, 2022, 02:35 PM

The Valero letter re: CA gas prices -- a question

Some (probably most) of you are far -- far -- more knowledgeable about this than I am, so I thought I'd ask here.

An old friend of mine, who happens to be a Republican, emailed me a letter sent by the Valero oil company to the California Energy Commission responding to an allegation that oil companies are inflating the price of gas here in CA as part of a conspiracy. The letter went on about how CA's requirements for energy companies are the strictest in the nation, and that they force the companies to have higher prices.

Now, I know he sent me the letter to "show" that Democrats in CA are the ones pushing these requirements and therefore responsible for the high price of gas.

So my question to you knowledgeable folks is, do you know offhand (or can you point me to any valid material) that compares how Democratic governments in CA have fared against Republican ones when it comes to making codes and requirements more restrictive? IOW, have Democrats pushed for more restrictions than Republicans, or the other way around? I'm thinking back to the Reagan era or even before then.

What I would dearly love to tell him -- if it's correct -- is that most of these restrictions were created during Republican administrations. If they weren't, then fine: I don't need to respond to him.

Thanks.

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Reply The Valero letter re: CA gas prices -- a question (Original post)
grumpyduck Oct 2022 OP
alwaysinasnit Oct 2022 #1
ProfessorGAC Oct 2022 #5
Probatim Oct 2022 #2
Zeitghost Oct 2022 #3
grumpyduck Oct 2022 #4

Response to grumpyduck (Original post)

Tue Oct 11, 2022, 02:44 PM

1. A bit of reporting from East Bay Times

https://www.eastbaytimes.com/2022/10/07/newsom-to-call-back-legislature-to-tax-oil-companies-gas-profit-greed-amid-sky-high-fuel-prices/

snip...

Data provided by the California Energy Commission on Thursday shows that $2.18 of every gallon sold in the last week of September went to oil refiners, up from 64 cents a gallon in August.

Energy analysts know that the recent price spike is linked to reduced gas production among the state’s oil refiners, which have reported some mechanical hiccups and scheduled maintenance. The limited supply and strong fuel demand caused gas prices to surge on the commodity market.

But the California Energy Commission has admitted that it is scratching its head at the dramatic price increase, which at one point surged 96 cents in two weeks even as gas prices around the country plummeted. The commission said the price hike is not fully explained by the maintenance and refinery outages and last week called on major oil companies to provide an explanation.

Only two oil refineries, PBF Energy and Valero, have publicly responded to the CEC. In a letter on Thursday, Paul Davis, a vice president at PBF Energy, blamed California’s environmental regulations and declining oil-refining capacity in the state for the severe price hike. But Davis declined to provide a more detailed explanation, citing state and federal antitrust laws that shield much of the oil industry’s pricing and operations decisions.

Newsom said claims that the price hike is due to mechanical issues or the state’s environmental regulations is “nonsense.”

snip...



emphasis is mine

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Response to alwaysinasnit (Reply #1)

Tue Oct 11, 2022, 04:18 PM

5. Scheduled Maintenance Is A Canard

Refineries use an accounting method that already reserves time (output) from total theoretical capacity.
Unplanned maintenance is, I readily admit, a different issue.
Then refineries do not assume 100% of rated capacity as full utilization. There's always 6% throughput rate above costed rate. The entire petro & petrochem industry does this, as do many other major chemical manufacturers. (Think plastics & solvents, for examples. )
So, other refiners came simply turn up 2, 3, 5% and supply is barely affected.
Finally, if supply were actually tight enough to trigger unwarranted prices, there should be at least SOME minor shortages. Are there regions in California where the consumer can't get gas they need?
If not, S&D is not the real reason.

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Response to grumpyduck (Original post)

Tue Oct 11, 2022, 03:04 PM

2. Remind him this is how the free markets work - high demand high prices.

Ask him if he's really supports laissez-faire economics.

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Response to Probatim (Reply #2)

Tue Oct 11, 2022, 03:15 PM

3. The gasoline market

Especially here in CA is a long, long way from laissez faire capitalism.

As for the OP, most of the gas taxes and regulations that lead to higher prices here were implemented in the las 20-30 years under Democratic leadership.

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Response to Zeitghost (Reply #3)

Tue Oct 11, 2022, 04:08 PM

4. Oh, darn.

But thanks for the info.

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