Pain at the Pump

Many California motorists have long believed that they get a raw deal at the gasoline pump. There are some reasons why gasoline should cost more in California than in other states, including high taxes and clean air requirements peculiar to California. But this spring, the oil companies lent credibility to the long-latent conspiracy theory that they rip off California motorists at the pump in part because we rely on our autos so much.

In little more than one month, the average price in California of regular gasoline formulated for clean air jumped 46 cents a gallon, from $1.16 to $1.62. In the San Francisco Bay area, regular sold as high as $1.79 a gallon and premium was just shy of the $2 mark. The increases were driven almost completely by price hikes at the refinery level--not by crude oil prices or station operators.

The oil companies had an explanation, of course. OPEC producers were limiting production because oversupply had pushed prices so low. And within a few days of each other, two major California refineries went out of production because of accidents. That does not explain, however, why most companies raised the prices by the same amount, including those whose refineries were not affected.

As public clamor increased, state Atty. Gen. Bill Lockyer began investigating to see if the oil companies might be held to account for collusion and price-fixing. Lockyer said an early analysis indicated that the OPEC action and the refinery closures accounted for less than half the price increase. The Federal Trade Commission also is investigating.

Government agencies have been probing gas pricing for decades and little has come of it. Gradually, market forces change and prices fall. But Lockyer’s figures indicate there may be excess profit-taking, particularly at the refining level. Even if his investigation does not result in legal action, Californians deserve a full accounting of why gasoline costs so much and who’s profiting.