From a Wall Street Journal editorial Sunday (in Monday’s paper):
California’s Green Gas Shortages
Prices are spiking thanks to state mandates that will only get worse.
Californians are grumbling about a gas price spike, which state officials blame on disruptions in the supply chain. Actually, they’re paying through the nozzle for their greener-than-thou government.
… 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.
… Any relief Californians feel will be short-lived. The state’s cap-and-trade program, which charges businesses for emitting carbon, will take effect this November. Oil companies warn they’ll pass on the costs to consumers. Meanwhile, a low-carbon fuel standard kicks into high gear in 2015. That’s when regulators expect the new generation of biofuels like cellulosic ethanol to be plentiful, though such fuels aren’t now commercially viable.
… By the way, Californians are already paying up to 50% more for their electricity than the rest of the country thanks to their renewable-energy portfolio standard.
The cost of such 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.
Well, if we all want to see $5 gas and supply-chain disruptions, we can vote for another term of Barack Obama and Lisa Jackson. No thanks.