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Spike In California Gas Prices Highlights Transportation Problems

by Mark Reynolds, published

California's gasoline prices set a new record on Tuesday at $4.671 per gallon, nearly 49 cents higher than one week ago, and 87 cents above the price at this time last year.

California senators Diane Feinstein and Barbara Boxer have called for federal investigations to look into why the price of gas has shot up in California. In a letter to Federal Trade Commission Chairman Jon Leibowitz, Senator Feinstein urged the FTC to "immediately open an investigation into recent spikes" in prices because the price spikes are "unjustified by supply and demand fundamentals."

Even though there have been supply disruptions due to a power loss at an Exxon Mobil refinery in Torrance and the shutdown of a Chevron refinery in Richmond due to a fire last month, the overall  supply is down only 2.5 percent over this time last year when the average price was about 87 cents cheaper than it is now.

In May, demand for gasoline was up 3.3 percent from last year according to the Board of Equalization. A 2.5 percent decrease in supply coupled with a 3.3 percent rise in demand would indicate that price increases were necessary, but it wouldn't seem to justify the 18 percent price increase that has moved the price from $3.81 per gallon at this time last year to $4.67 today.

Governor Jerry Brown took the unusual step of ordering the California Air Resources Board to allow the early sale of winter-blend gasoline to increase supply and ultimately attempt to lower the price of gas. The winter-blend is cheaper, but potentially less environmentally friendly than the summer-blend.

California has stricter environmental regulations than most other states in the country which is why the state has relatively few refineries producing its gas. Therefore, the state is more susceptible to a sudden spike in gas prices. The current national average price of gasoline is $3.815, up about 42 cents from $3.396 one year ago.

Senator Boxer and Senator Feinstein's urging for investigations and Governor Brown's attempt to ease prices in the short term by introducing the winter-blend sale early are short-term solutions to what ails the transportation system. People have known for a long time that the price of gasoline would rise as consumption increased worldwide and oil reached its peak level, in which half of the world's supplies are used up. Technological advancements that have allowed more oil extraction and built more fuel efficient cars have temporarily postponed the threat of an energy shortage.

Yet, the current transportation system remains problematic. Driving is an expensive activity when you consider the environmental consequences of greenhouse gas emissions as well as the price of gas, cars, and infrastructure. Driving can also be incredibly stressful given the chances of an accident as well as the frustrating feeling of being stuck in traffic.

The calls for investigations and an attempt to ease prices are logical political moves. However, political leaders should be thinking bolder. Our current transportation system was primarily built nearly six decades ago after the passage of the Federal Aid-Highway Act of 1956. Rather than continuing to focus on short-term supply, demand, and cost issues, we need political leaders that can envision and implement a more efficient transportation system for the future.

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