Market Forces Are What Fuel Gas Prices
Peter Navarro (“Why Gas Prices Are So High,” Opinion, Dec. 12) betrays his utter lack of understanding of economics and anti-business bias. When gas prices are adjusted for inflation, today’s cost is a relative bargain. There are a number of websites with data to back this up. Why are refineries disappearing? Could it be that regulations and lawsuits make them difficult or impossible to replace and reduce their profit margins on operations? Oil companies don’t have to “squeeze the supply” artificially: increased demand during the summer and decreased supply because of refinery disasters do that, and the law of supply and demand takes over.
It’s a signal to consumers to alter their behavior until the market achieves equilibrium. That’s not fair, you say? If your retirement depended in part on oil company stock prices, dividends, etc., would you want those companies charging $1.50 a gallon when they could sell their production for $1.65 a gallon?
Jim Halloran
Redondo Beach
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Navarro’s allegations have been investigated repeatedly and found by experts to have no merit. For example: There are fewer refineries here not because of oil industry strategies but because smaller refineries were unable to afford the cost of equipment needed to produce our state’s unique cleaner-burning gasoline, according to the attorney general and California Energy Commission.
The CEC and U.S. Energy Information Administration have concluded that charges of seasonal or other market manipulation are untrue, with price volatility being instead attributable to market forces, notably the widening gap between supply and demand in California. Independent retailers, far from being forced out of business, operate over 94% of the state’s gas stations, according to the Lundberg Survey.
Government investigators and independent experts agree: California’s volatile gasoline market primarily results from fluctuating crude oil prices, high taxes, restrictive state regulations and a resulting insufficient increase in refining capacity to meet growing demand.
Joe Sparano
President, Western
States Petroleum Assn.
Sacramento
