Gasoline prices spike higher in California

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Posted at 9:31 a.m. PDT Monday, May 8, 2000

Gasoline prices spike higher in California WASHINGTON (Reuters) - Retail gasoline prices jumped in California at the same time as the rest of the country over the past five years, but prices generally shot higher in that state than elsewhere, according to a new government report.

Six of the seven times that gasoline prices increased significantly between January 1995 and December 1999, prices in California rose 3 cents to 31 cents a gallon higher than in the rest of the country, according to the report by the General Accounting Office, the independent investigative agency of Congress. The report was released late Friday.

California consumes almost 1 million barrels of gasoline a day, more than any other state. A barrel hold 42 gallons.

The GAO offered no explanation of its own for the gap in prices.

But it said federal, state and oil industry officials told it that California's higher prices were caused primarily by unplanned refinery outages that disrupted the state's tight balance between gasoline supply and demand.

California refineries produce at almost full capacity and only a few out-of-state refineries can produce gasoline that meets California's tough clean air standards, the agency said.

Some West Coast gasoline service station dealers blamed the higher price spikes on reduced competition at the refinery and retail level, the GAO said.

But the agency said it was unable to test that theory because oil companies' pricing formulas and policies were not readily available.

The GAO noted that the Federal Trade Commission is investigating West Coast gasoline prices in response to allegations of anti-competitive behavior by oil companies.

The GAO said retail gasoline prices are higher in San Francisco than in Los Angeles, in part because of local supply and demand conditions.

The gap in fuel prices between the two cities was about 11 cents between January 1992 and December 1999, it said.

These price differences are due to the number and location of retail gasoline stations in the two urban centers, the cost of building and operating stations and consumer incomes, the GAO said.

There are about 19 gasoline stations in San Francisco for every 100,000 people, compared with about 25 stations in Los Angeles, primarily because real estate and construction costs are about 50 percent higher than in Los Angeles, the GAO said.

In addition, zoning and other regulations make it harder for San Francisco station owners to operate adjacent convenience stories, eliminating profitable secondary sales, the GAO said.

Finally, incomes are higher in San Francisco than in Los Angeles, which may make demand for gasoline in San Francisco less sensitive to price, the agency said.

http://www.sjmercury.com/breaking/docs/023701.htm

-- Martin Thompson (mthom1927@aol.com), May 08, 2000


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