California Gas Prices: The Law of Unintended Consequences

We won’t be driving here anytime soon, thanks to gasoline prices in California!

Improving air quality is a good thing.  No sane person could argue against that.  But we all should be part of the discussion as to how we might best accomplish such a noble goal.  And if we find that the cost of even incremental improvement would present an undue hardship on any segment of our society, perhaps the benefit is not worth the cost — no matter how worthy the benefit.

We had this discussion with ourselves as we passed by several gas stations here in SoCal this weekend, only to be shocked and shocked again, over and over, at the amazing, meteoric rise in gasoline prices.  You’ve seen it too, we’re sure.  And we are all asking the same question: Why?

As with just about any aspect of modern human existence, there are many factors.  But one which we believe should get much blame is regulation.  We certainly see the cost impacts in the Water industry, but we’re really “small potatoes” compared to other industries, especially energy.

There is no escaping the profound effect that automobiles have on air quality.  But we need to recognize that air quality is vastly improved since the passage of the landmark environmental laws of the Nixon administration (yes, that Nixon!), including the Clean Water Act, the Safe Drinking Water Act, and Clean Air Act, and the establishent of the Environmental Protection Agency.  It is also important to recognize that no regulation — ever — has improved the environment.  Only concrete actions by citizens and corporations have improved things.  Admittedly, many of those actions were to avoid violations of regulations.  But every one of those actions cost someone money to accomplish.

Today we are invoking “The Law of Unintended Consequences.”  That is, during the pursuit of a noble goal — such as improving air quality — other things might happen as a result — such as gas prices going stratospheric.

California must have the most stringent air quality regulations in the world.  Good for California! say those whose focus is solely upon the environment.  These same folks assure us that we will never feel the cost of any steps that they deem appropriate to save our planet.  Well, they have always been wrong about that, and that has now become obvious to even casual observers, courtesy today’s gasoline prices.

You see, California gasoline is unlike any other gasoline in the world.  We have “designer” gasoline, courtesy “do-gooders” in our state legislature.  Because only a few refineries in the world will make “our” gasoline, it is always in short supply, and thus California gasoline almost always has the highest price in the “Lower 48.”

Not only that, but our state government mandates that the gasoline change blends twice a year; our designer gasoline actually changes with the season!  And we are just about to change to the “Winter Blend.”  (We swear, we are NOT making this up!)  So a few of the very small number of refineries that actually make our gasoline are in transition right now, preparing to supply our Winter Blend, thus preventing them from producing any of our Summer Blend for a few weeks during the switchover.

Compounding this situation is the extreme difficulty of building new refineries in California.  Other environmental regulations make such construction nearly impossible; in the past few decades we have lost far more refineries than we have added.

Our thoroughly over-taxed gasoline infrastructure had some inevitable maintenance issues in the past week, thus curtailing an already slim supply.  Econ 101 happened: lower supply; higher prices.

Many will blame the “greedy” oil companies; some will blame the extravagant lifestyle of Californians; others will blame Wall Street and market speculators.  But we believe the lion’s share of the blame belongs to the California Legislature.  They never have met an environmental law or regulation that they didn’t like.  And the unintended consequences be damned!

In other news, Water folks: the California Water Treatment Operator certification exam is now less than six weeks away.  Count on MOST to help you prepare.  Check out our Water Quality, Water Treatment, and Water Math courses.  Each is about one hour long, completely online, and filled with the standard Water curriculum for California Community Colleges — we know, because we developed it!  And did we mention that each course is only $10?

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