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New taxes and higher costs of oil drive up gasoline prices for holiday season

New taxes and higher costs of oil drive up gasoline prices for holiday season
Gasoline prices in Southern California reached their highest since the 2013 holiday season, driven by new taxes and higher crude oil costs. (Gene J. Puskar / AP)

More Southern California residents are expected to hit the roads this holiday season than ever, and they’re going to be paying more in gasoline prices than they have since 2013.

The higher cost of crude oil is driving up gasoline prices nationwide. And a new state fuel tax that took effect Nov. 1 is helping keep Southland gasoline prices 67 cents above the national average.

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In Southern California, gasoline prices this week ran about $3.09 a gallon for regular. The statewide price was $3.08, while the national average was $2.42, prompting some critics of the oil industry to question whether California consumers are being gouged.

Not since 2013, when Southern California gasoline prices ran about $3.63 as crude oil reached $110 a barrel, have holiday gasoline prices hit these highs. Gasoline prices were 20 cents lower in December 2015 than today, even when the Torrance refinery — which supplies 20% of the refined gasoline capacity to Southland — sat mostly idle through the 2015-2016 holiday season as a result of an explosion.

Despite the high prices, Californians will travel more than 50 miles in record numbers from Dec. 23 to Jan. 1 — 8.2 million Southern California residents and 13.2 million people statewide, according to AAA Automobile Club of Southern California. That’s up 3.6% from a year ago.

“Obviously there’s demand out there that’s higher than previous years,” said Marie Montgomery, a spokeswoman for the automobile club. “Although prices were dropping since November, they haven’t gotten to where they were Oct. 31,” before the gas tax hike.

The additional 12-cent tax added on Nov. 1 raised California’s state excise tax for gasoline to 41.7 cents a gallon. The additional taxes help fund roadway improvements statewide.

Gordon Schremp, a senior fuels specialist with the California Energy Commission, said California’s gasoline taxes and fees usually keep the state’s retail prices higher than the rest of the country.

But oil industry critics say state residents should benefit from a strong production cycle with no refinery problems. In addition, the winter blend of gasoline is being sold now and does not have the same, more costly environmental state requirements as summer fuel.

“Inventories are very high. Production is very good,” Schremp said. “Right now in California, gasoline is ample.”

And the weather is good, he said, which leads motorists to hit the roads.

Bob van der Valk, an oil industry analyst, said retailers are simply taking advantage of the higher demand for gasoline, despite the higher stockpiles.

“Retail is really making some big bucks,” van der Valk said. “The service station owners are basically holding the price, especially on the branded side. When the profit and loss statements come out, it’s going to be a lot of profits.”

The Western States Petroleum Assn., an oil industry organization, defended the price of gasoline as a product of various factors, some of which are beyond the control of oil companies and retailers. Prices at the stations are affected by the higher-than-average gasoline taxes, added cost of producing California’s environmentally friendly gasoline and programs to reduce greenhouse gas emissions, said Catherine Reheis-Boyd, the organization’s president.

“Differentials in average fuel prices in California as compared to the rest of the nation are driven by those factors, as well as our state being a fuel ‘island,’ without pipelines bringing refined petroleum products into the state,” Reheis-Boyd said.

Jamie Court, president of advocacy organization Consumer Watchdog, criticized the oil industry for taking advantage of consumers. “I think this is all about profit taking for the refiners for Christmas, and it’s bah humbug for the rest of us.”

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Hoping to bring some holiday cheer to motorists as they pondered where to pump their gas, Gasbuddy.com and Phillips 66 made Dec. 21 a gasoline giveaway day. For two hours, motorist received up to $20 of free gas at a 76 Gas Station in La Puente.

“Bad news: LA drivers will be paying the highest holiday gas prices since 2013. Some of the most expensive in the nation!” Gasbuddy.com said in a statement. The good news: a “tank takeover event” that put thousands of dollars of gasoline in car tanks for free.

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