A sharp letter to the editor this past weekend alerted me to a startlingly good Los Angeles Times story I had missed on California's high gas prices, complete with a graph that almost tells the story itself.
Here's the letter, from Jim Cody of North Hollywood:
The graph that accompanied this article, which shows how crude oil prices, taxes, refiners and station owners have influenced the price of gas recently, proves that practically all of the recent run-up in California gasoline prices is going to the refinery owners: Chevron, Tesoro, BP, ConocoPhillips, Exxon Mobil and four others. Chevron, BP, Exxon Mobil and ConocoPhillips are, along with Shell, the five largest oil companies in the world, and in 2011 they made record profits of $137 billion.
Since only one segment of the gasoline supply chain is profiting from this price run-up, it is hard to believe that this segment is not also solely responsible. The oil companies say they are not actively colluding to set prices; since they aren't, they have apparently developed some other price-gouging method that is just as effective and just as destructive to the economy.
Every time an oil severance tax has come up for consideration in California, the oil companies have warned that that would raise gas prices. Turns out that gas prices are going to go up anyway, but at the oil companies' convenience. At least if we pass an oil severance tax, we will get something out of it, just like the socialist states of Alaska, Texas and Oklahoma.
Here's the story, with a partially anecdotal opening:
"You can't believe how customers talk to me," said [gas station owner] Arya, who was born in India but has lived in the U.S. for almost 40 years. "They say, 'You foreigner, you're gouging.'"
While Arya was losing money, the state's oil refiners were raking it in. For the week that ended Oct. 8, when the average price for a gallon of gasoline in California hit a record high of $4.67, the portion of the retail price going to refiners, or margin, jumped to $1.22 a gallon. That was up 75% from the previous week. And it was nearly triple the average margin of 42 cents a gallon this year, according to California Energy Commission data.
And here's the exemplary charticle, mentioned in the letter above.