Gov. Jerry Brown Orders Switch to Winter Gas To Dampen Price Spike

A move by the governor is made to help ease the dramatic spike in prices at the pump.

Governor Jerry Brown Sunday ordered California smog regulators to allow winter-blend gasoline to be sold in California this month, a move intended to reverse a sudden scare in the wholesale gasoline market that saw prices shoot up nearly 50 cents a gallon in six days.

In the Los Angeles market, the average price today went up nearly 4 cents, to another record level: $4.696. The Orange County price average was one cent less, and also at a new record for the second straight day.

The governor ordered the California Air Resources Board to allow refiners and gas stations to roll out the winter blend before its previously- scheduled Oct. 31 sales date, an action the governor said will increase gas supplies up to 8-10 percent, "with only negligible air quality impacts."

In a letter released at noon, as California gas prices fluctuated widely for the seventh straight day, the governor said the market variations were imposing "unacceptable cost impacts on consumers and small businesses." This, he said, was threatening "significant economic disruption, and serious harm to public safety and welfare."

An analyst said California's wholesale gasoline market has gone "into a panic about the adequacy of California fuel supplies" Jeffrey Spring of the Automobile Club of Southern California said the market disruption followed a power failure at the ExxonMobil Torrance Refinery and closure of a Chevron pipeline that moves crude oil to Northern California last Monday.

Other pressure on the state's gas market includes local refineries dropping production levels, energy companies exporting fuel to Mexico and other countries, and allowing inventory to dwindle in anticipation of switching over to production of winter blend gasoline, Spring said. The average price of a gallon of self-serve regular gasoline in Los Angeles County rose to a record $4.661 Saturday, increasing 12.2 cents from Friday. In Orange County, it settled at one penny lower than LA.

"I am directing the Air Resources Board immediately to take whatever steps are necessary to allow for an early  transition to winter-blend gasoline" to be sold in California, the governor said in a letter to Mary Nichols, his appointed head of the CARB.

Some clean air advocates had worried that such a move would hurt air quality in October, which is one of the hottest months in coastal California due to Santa Ana windstorms and other seasonal weather fluctuations.

The governor said today that winter gas evaporates more quickly than summer blend, which takes longer to evaporate and is better during the smoggiest months of the year in the summer.

Brown said he expected gas prices to settle down, now that the ExxonMobil refinery in Torrance has resumed operations following an electricity outage last week. A Tesoro refinery in the South Bay is expected to resume production next week, after its maintenance shutdown.


Panglonymous October 09, 2012 at 06:17 PM
All interesting stuff, Mike, thanks for kicking in. "The infrastructure for alternative energy takes years to build. Though it pains me, subsidies are the only alternative." So, do consumer subsidies to jumpstart alternative have a chance if actively opposed/blocked by the lobbying and strategic allocation of campaign funds by conventional energy?
Mike Ruehle October 09, 2012 at 06:38 PM
If a bond is issued, there has to be a way to pay back the bond holders as promised. This can only be done by a profitable industry or the backing of the government (subsidy). The improvements in micro electronics and the internet were driven by venture capital investment once a market was identified. Venture Capital investment drives USA's innovation. Your natural gas example is both a good and bad. In my opinion, good because it proves that infrastructure issues like natural gas pipelines need to be undertaken despite the objections of environmentalists. Bad, because most of those pipelines were made out of non-code materials, installed over 80 years ago and have NEVER been inspected. Unlike oil company pipelines which must be inspected every three years, natural gas transmission pipelines in the street outside your house have NEVER been inspected. Over the next 20 years, you will hear more about failures of these systems. It is already starting to happen on the east coast where such systems have been in service for a longer time.
Mike Ruehle October 09, 2012 at 06:46 PM
They don't stand a chance against the lobbyists unless the elected leaders become representatives of the people rather than representatives to their re-election. Big oil, internal combustion engine companies and their unions have unlimited funding, lobbyists and power. The only reason the ethanol subsidy went through is because farmers have comparable political power and oil companies didn't see it as a threat.
tiny October 09, 2012 at 07:05 PM
The money going to companies that build the CNG combustion engines and the ones building the delivery systems will easily be able to pay the loans back and make a profit because there will be 30 million trucks needing to fuel up. Plus you can retool your closed down auto plant factories and put people back to work. "Venture Capital drives investment and innovation". But gov't directed projects like the Apollo Project and other science drivers give a direction and drive it more. You can't inspect and set standards for natural gas pipelines?
Rose Hernandez November 23, 2012 at 10:34 PM
Amen, amen and amen!


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