Catholic Online (www.catholic.org)
A recent spike in gasoline prices has California consumers fuming. And while the prices have finally begun to drop, many are angry with their local gas stations, unaware of who is really to blame.
LOS ANGELES, CA (Catholic Online) - Throughout the 1980s, a myth made the rounds of public schoolyards. The story was that California would be struck by a great earthquake and become an island, or even sink beneath the waves like the fabled isle of Atlantis.
Although such a thing is an impossibility for scientists, economists might tend to believe it has already happened where gas prices are concerned. California is in every sense, a literal island when it comes to gasoline.
Virtually all of the gasoline consumed in the state is produced at one of the state's 14 refineries. In the 1980s, there were 27 refineries, but none have been built to replace the old.
Now aging, a simple problem at one refinery can stop or slow production for days or even weeks. When even a single refinery stops production, it creates more demand for the others, and prices quickly rise.
When prices rise, the refiners win because they can pocket much higher costs. Meanwhile, it's your local gas station that loses because they buy the gasoline at higher prices and must sell for less, or face an angry consumer backlash.
Some station owners simply stopped selling gas altogether during the spike.
Making the matter worse, California requires a special blend of gas designed to burn more cleanly and to preserve the air in the environmentally aware state. That blend is only produced in California. The only other refineries capable of producing it are along the Gulf Coast and it would be prohibitively expensive to ship that gas to California.
All this means there's very little competition in California's gasoline market, which is also susceptible to disruptions.
Refiners are also free to sell their gasoline and petroleum products elsewhere too. That means if there's more profit to be had in Mexico or another state, refiners will sell there instead, leaving California dry.
Therefore, Californians can reasonably expect more supply disruptions and more price spikes well into the future. Until more refineries are built and competition is increased, the only weapon consumers will have is conservation.
Not like that's such a bead weapon, mind you.
© 2012, Distributed by NEWS CONSORTIUM.
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.