State Ponders Keeping Its Own Fuel Reserve

California, the state with the largest gasoline demand and the highest pump prices in the continental United States, is exploring whether it should establish a petroleum reserve that could ward off future price spikes.

The California Energy Commission has embarked on a study to determine whether a reserve of gasoline products would benefit motorists by ensuring a relief supply in times of sharp price increases.

A reserve would store gasoline, gasoline components, diesel and ethanol in sites throughout the state. The commission will present its findings to the Legislature.

Although retail gasoline prices have fallen from all-time highs in early May, California drivers still pay 26% more for gasoline than other U.S. drivers, according to American Automobile Assn. statistics released this week.

California is more vulnerable to price volatility because it requires a cleaner-burning gasoline that is mostly supplied by in-state refineries. In addition, a lack of petroleum pipelines linking California to U.S. Gulf Coast refineries adds to the market’s fragility.

If supplies get tight, drivers may have to wait three or four weeks for surplus gasoline to be shipped from the Gulf of Mexico to the West Coast via the Panama Canal, officials say.

“If we had additional stuff in inventory to be used during these events, you wouldn’t have to wait three or four weeks,” said Gordon Schremp of the Energy Commission.