Editore"s Note
Tilting at Windmills

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March 1, 2004
By: Kevin Drum

FRAGILE REFINERIES....Like the swallows returning to Capistrano, gasoline prices are increasing in California due to unexpected refinery problems:

In the last week, the price of self-serve regular jumped more than 20 cents to an average of $2.152 per gallon....This year's increase 51 cents per gallon so far is being blamed on a spate of malfunctions that reduced gasoline output at several of the state's refineries.

This year's increase? I did a quick check of the Los Angeles Times for the last five years:

  • June 11, 2003: Technical troubles have shut down parts of three California refineries....Traders have reacted to the refinery glitches by sending gasoline prices up 16 cents a gallon -- to $1.165 -- since Friday on the so-called spot market, said Mark Mahoney, markets editor for the Oil Price Information Service.

  • March 8, 2002: California drivers should brace for a new surge in gasoline prices brought about by refinery problems, higher oil prices and increased demand....The wholesale market is being roiled by outages at the Valero Energy Corp. refinery in Wilmington and the ChevronTexaco Corp. refinery in Richmond, in northern California.

  • September 1, 2001: Wholesale gasoline prices in California rose again Friday on reports of another refinery problem in the state, keeping upward pressure on pump prices as the busy Labor Day driving weekend gets underway....The wholesale price of regular self-serve gasoline in the Los Angeles area reached as high as $1.28 a gallon Friday.

  • September 6, 2000: California drivers are paying nearly a dime more at the pump than they were a week ago, the Energy Department said Tuesday. Gasoline station operators blamed the big oil companies, which in turn blamed stubbornly high oil prices, minor refinery headaches and heavy end-of-summer demand.

  • July 20, 1999: The state's average gasoline price zoomed 8 cents a gallon higher in the last week, as rising oil prices and continuing refinery problems crashed into record fuel demand....The average price of regular unleaded self-serve gasoline was....up 8.2 cents a gallon from the previous week and 13.6 cents more a gallon than the average price two weeks ago, the U.S. Energy Department reported Monday.

I'm not the suspicious type, but it sure seems like we have an awful lot of refinery problems here in California, don't we?

"When everything's running right and the demand isn't too high, we have enough capacity, but that doesn't happen very often," said Severin Borenstein, director of the University of California Energy Institute. "Usually something goes wrong."

Yes, that does seem to be the case, doesn't it? Maybe we need more refinery capacity?

There are no plans for new refineries or major expansions. In fact, this fall, Royal Dutch/Shell Group will close its Bakersfield plant.

Hey, that should help keep supplies tight and profits high!

Kevin Drum 9:09 AM Permalink | Trackbacks

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