Senator Seeks Investigation of High Gasoline Prices in California

Senator Dianne Feinstein of California is asking the Federal Trade Commission (FTC) to perform an investigation of the 30-cent increase in California’s current gasoline prices incurred throughout August.

In a letter, Sen. Feinstein attempted to remind the FTC that the price hike occurred after the fire at a Chevron refinery in Richmond, California. Even though the fire brought one of the refinery’s crude distillation units offline, the incident did not cause a supply shortage that can explain the rise in the gasoline prices today.

If the sharp rise in the state’s current gasoline prices can’t be justified by supply and demand, it is very impotant for the FTC to quickly and efficiently look into the matter, wrote the senator.

According to the state’s Energy Commission, refineries in the state grew their output by 12.4 percent during the week that ended in August 10 compared to the week before that. That figure is an indication that the sharp rise in gasoline prices is unnecessary.

In the past month, gasoline prices nationwide have moved up. However, the senator said that the increase in California was much quicker compared to many other states.

On the average, California’s drivers spend about $4.14 per gallon for the gasoline prices today. That amount is higher compared to almost all the other states, according to the daily Fuel Gauge Report of the AAA.

Senator Feinstein cited a study in 2009 by the Government Accountability Office suggesting that, on top of supply and demand, there are other factors at play in determining the retail prices of gasoline in California. The senator wrote that the study implies that California’s refineries and fuel marketers have gained the needed market share to mobilize prices and maximize revenues at the cost of the state’s consumers.

Crude oil futures prices, the major driver of prices at the pump, steadily increased in August from its level of below $90 per barrel during the start of August. The recent crude price per barrel for delivery in October moved up to $96.14.

By: Chris Termeer