by MN Gordon, Economic Prism
Last Wednesday night, following the Presidential debate, we stepped outside our back stoop and were greeted with the displeasure of a sulfurous odor. It singed our nose hairs. It burned our eyes. We could practically taste it.
At first we thought it was migrational tailings of the gigantic egg President Obama had just laid in Denver wafting over the Rocky Mountains, through the inland desert states, and across the Los Angeles Basin…before settling over Long Beach and the San Pedro Bay. But after a little reconnaissance we learned a hiccup at one of the gasoline refineries in the harbor had belched forth the foul odor.
By Thursday morning the air was fresh. Yet on our way to work we learned that a series of hiccups at refineries across the state had resulted in rapidly escalating gas prices. A power outage at Exxon Mobile’s Torrance refinery limited its service all week. Plus, Chevron’s Richmond refinery has been at reduced production after an August 6 fire.
When we left work Thursday evening prices had jumped to $4.40 per gallon for regular unleaded gas. We filled up our tank. By Friday morning, the same low octane gas was now selling for $4.70 per gallon. Later we saw reports that prices had topped $5 per gallon in the San Fernando Valley.
By Saturday gas prices across the state had risen to an all-time high. By Sunday they were even higher. Yet the national average this whole time was just $3.79. In other words, California’s gas supply crunch was of its own making…
Morons in Sacramento
You see, here in the land of fruits and nuts anything and everything’s possible. The Golden State’s vast expanse and dynamic vigor offers limitless opportunities for the spectacular. Success, failure, and redemption cross through people’s lives like motorcycles cutting through rush hour traffic on the 101 Freeway in Hollywood.
Where the State government’s concerned, the abundance of sunshine and the abundance of tax revenue deliver a dizzying intoxication to the legislature’s collective brain. All their daydreaming about how to merge Disneyland and the Silicon Valley into one gigantic statewide utopia has had the ill effect of inhibiting real commerce. Somehow the morons in Sacramento have taken the 8th largest economy in the world and turned it into an enterprise that subtracts value from the lives of the state’s 37 million inhabitants.
There are many ways that they go about it. But last weeks fabricated gas shortage offers an instructive example…
In most states, if a couple refineries go offline, wholesalers can just purchase their gasoline from a neighboring states refinery. The cost may increase slightly, but it wouldn’t result in a complete and total supply squeeze.
But in California such a simple solution is not possible. For the law makers and the regulators have effectively made gasoline in the state a closed market. Of course, the intentions mean well…they always do…
“The situation is compounded by a pollution law that requires a special blend of cleaner-burning gasoline from April to October, said Denton Cinquegrana, executive editor of the Oil Price Information Service, which helps AAA compile its price survey.
“Few refineries outside the state can make it, meaning there are few outside sources to draw from for help, Cinquegrana said.
“The California Air Resources Board was reviewing a request from the California Independent Oil Marketers Association for a waiver that would allow gas stations to begin selling winter-blend gasoline before Halloween.
“David Clegern, a spokesman for the air board, said the California Energy Commission would have to review gas inventories to confirm there is a shortage and assess what effect the switch would have on air quality.”
Huh? The California Air Resources Board punted a waiver request over the fence to another state Agency, the California Energy Commission, to confirm the obvious? On top of that they have to do an air quality assessment to permit the use of a gasoline grade that’s legally allowed come the end of the month?
Apparently so. You see, this is how regulations work in the land of fruits and nuts. They mandate scarcity. Moreover, they remove all common sense from consideration and make it impossible for the governing agency’s staff to do one critically important
Finally, late Sunday, when it was painfully clear that regulatory staff were incapable of making a simple and obvious decision, Governor Jerry Brown ordered the California Air Resources Board to allow winter-blend gasoline. From what we gather the air quality regulator will comply.
[MN Gordon (send him email) is the editor of the Economic Prism. Visit Economic Prism. The Economic Prism is published by Direct Expressions LLC. Subscribe Today to the Economic Prism E-Newsletter at http://www.economicprismletter.com]