CalBears96
Well-known member
OCtoSV said:
What does that have to do with the current jump in gas price? Why don't YOU do some homework? What happened to $300 oil price you claimed?
Oil
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What does that have to do with the current jump in gas price? Why don't YOU do some homework? What happened to $300 oil price you claimed?
someguy
Active member
Why are CA gas prices so much higher than other states?
CA gas prices are the highest of any state. https://gasprices.aaa.com/state-gas-price-averages/
The political narrative points to gas companies expanding their margins and price gouging. And guess who has the solution? Government! As long as you vote for their party. Surely politicians are not pandering for the purposes of their own self interest, right?
Businesses have always been greedy profit maximizing enterprises. They didn't suddenly decide to do that a month ago to CA only.
The reality is economics and taxes.
1) CA truckers are now required to be employees, not contractors. This is more expensive for both the company (payroll taxes, workers comp, administration, and other benefits) and the employee (expenses are no longer a tax deduction). Some truckers and/or trucking companies may avoid working in CA all together due to the employee requirement, which will reduce the supply of available truckers, and thus raise the price of trucking/transportation. These costs are passed on to the consumer.
2) CA gas taxes are roughly $0.54 per gallon plus 2.25% state sales tax plus applicable district taxes. The rate went up starting 7/1/22. CA also charges other "fees" for "low carbon gas programs", "greenhouse gas programs", and "underground tank storage". There's some federal taxes as well. The total amount of tax and fee per gallon in CA varies, but it's around $1.25/gallon
https://www.cdtfa.ca.gov/taxes-and-fees/sales-tax-rates-for-fuels.htm
https://ktla.com/news/taxes-fees-make-up-1-18-per-gallon-of-gas-in-california/
3) CA refineries face ever increasing compliance costs as CA rolls out various "green" initiatives. These costs are passed on to the consumer
4) CA refineries need to shut down for maintenance. Maintenance is including but not limited to transitioning from the summer blend to the winter blend. Less operational refineries reduces supply. Demand is roughly unchanged, so prices rise. Additionally note that when refineries are shut down, they are not selling product, so the money inflow stops. Shutting down to let the competition charge higher prices isn't exactly in the interest of a greedy profit maximizing enterprise. They shut down because they have to and it's in their best interest to come back online ASAP.
5) The general cost of doing business in CA continues to rise. Labor costs are rising with continued minimum wage hikes, imbalanced labor market (more job openings than available workers puts upward pressure on wages), cost of living, cost of energy, etc. All of this puts upward pressure on prices that companies must charge to offset their costs.
6) This is speculative, but remember when the $7,500 EV credit was announced with the inflation reduction act and Ford almost immediately raised the price of their EVs by $7,500? Well, gas stimulus checks are being sent out to eligible CA residents starting today. Obviously it's just cash to be spent anywhere and not specific to gas purchases, but it's in the realm of possibility that oil/gas companies in CA raised their prices in anticipation of this. They're greedy profit maximizing enterprises, remember? Again, speculation.
Economics and taxes.
CA gas prices are the highest of any state. https://gasprices.aaa.com/state-gas-price-averages/
The political narrative points to gas companies expanding their margins and price gouging. And guess who has the solution? Government! As long as you vote for their party. Surely politicians are not pandering for the purposes of their own self interest, right?
Businesses have always been greedy profit maximizing enterprises. They didn't suddenly decide to do that a month ago to CA only.
The reality is economics and taxes.
1) CA truckers are now required to be employees, not contractors. This is more expensive for both the company (payroll taxes, workers comp, administration, and other benefits) and the employee (expenses are no longer a tax deduction). Some truckers and/or trucking companies may avoid working in CA all together due to the employee requirement, which will reduce the supply of available truckers, and thus raise the price of trucking/transportation. These costs are passed on to the consumer.
2) CA gas taxes are roughly $0.54 per gallon plus 2.25% state sales tax plus applicable district taxes. The rate went up starting 7/1/22. CA also charges other "fees" for "low carbon gas programs", "greenhouse gas programs", and "underground tank storage". There's some federal taxes as well. The total amount of tax and fee per gallon in CA varies, but it's around $1.25/gallon
https://www.cdtfa.ca.gov/taxes-and-fees/sales-tax-rates-for-fuels.htm
https://ktla.com/news/taxes-fees-make-up-1-18-per-gallon-of-gas-in-california/
3) CA refineries face ever increasing compliance costs as CA rolls out various "green" initiatives. These costs are passed on to the consumer
4) CA refineries need to shut down for maintenance. Maintenance is including but not limited to transitioning from the summer blend to the winter blend. Less operational refineries reduces supply. Demand is roughly unchanged, so prices rise. Additionally note that when refineries are shut down, they are not selling product, so the money inflow stops. Shutting down to let the competition charge higher prices isn't exactly in the interest of a greedy profit maximizing enterprise. They shut down because they have to and it's in their best interest to come back online ASAP.
5) The general cost of doing business in CA continues to rise. Labor costs are rising with continued minimum wage hikes, imbalanced labor market (more job openings than available workers puts upward pressure on wages), cost of living, cost of energy, etc. All of this puts upward pressure on prices that companies must charge to offset their costs.
6) This is speculative, but remember when the $7,500 EV credit was announced with the inflation reduction act and Ford almost immediately raised the price of their EVs by $7,500? Well, gas stimulus checks are being sent out to eligible CA residents starting today. Obviously it's just cash to be spent anywhere and not specific to gas purchases, but it's in the realm of possibility that oil/gas companies in CA raised their prices in anticipation of this. They're greedy profit maximizing enterprises, remember? Again, speculation.
Economics and taxes.
irvinehomeowner
Well-known member
Liar Loan said:
So let me correct your misdirection... gas has just gone up drastically this last few weeks... not few months... that increase has been in place since July 1. No gas tax increase in August or September or this month... so it doesn't make sense what morekaos was saying.
And price difference in Cali between other states is dollars not cents... so there has to be something else at play other than taxation.
yes, regulation. Operating a refinery at acceptable operating margin is increasingly difficult without extreme pricing levels. Only by embracing the fossil fuel industry will we get gas prices to come down - which means they're permanently elevated in CAirvinehomeowner said:
irvinehomeowner
Well-known member
Has there been a significant change in costs between operating refineries, cost of oil, etc... now than last year prior?
I just don't believe that costs have gone up that much just in Cali to warrant these prices... especially when you see how much more profits these companies are making... that's where the difference is... seems very plain and simple to me.
And the fact that they can change so quickly just points to more greed than "factoring in cost of maintenance".
Cali people need/want to drive... oil companies take advantage of that.
Food is pretty expensive now too... and that can't be just costs... I think part of it is for making up for lost money during the height of Covid.
I just don't believe that costs have gone up that much just in Cali to warrant these prices... especially when you see how much more profits these companies are making... that's where the difference is... seems very plain and simple to me.
And the fact that they can change so quickly just points to more greed than "factoring in cost of maintenance".
Cali people need/want to drive... oil companies take advantage of that.
Food is pretty expensive now too... and that can't be just costs... I think part of it is for making up for lost money during the height of Covid.
All these speculative talk about regulation and taxation. Torrance and El Segundo refineries aren't that far away from Irvine, has anyone here actually talked to anyone working in the industry?
This was heard over a few beers with people in the industry. Take it as hearsay as you will. While regulation and taxation is does increase California as price by a small margin. It's not the main reason.
In fact, the requirement of CA needing their own process and refinery basically made CA oils its own system and should provide additional buffer for CA from most of the price fluctuation due to world event. However, you don't see this on our local oil pricing, because there is profit to be made.
The Torrance Exxonmobil refinery fire back in 2015 allowed all other refineries in CA to made record profit for over a year. Even though they can actually keep up with the demand.
Industry higher up and financial analyst learned that the demand for gas is a largely inelastic demand, they can increase the price on gas as long people doesn't riot.
The war is simply the perfect camouflage for them, since people are easily manipulated and love to blame other without actually look into what's going on.
The refineries made record profit back in 2015, and they are making record profit now.
If increased cost of production and drop in supply is the main reason for gas price increase, profit shouldn't have increased as much as it did in the last few quarters. but hey, keep blaming existing policies, that's exactly what they expect you to do.
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MTalltheway
New member
This is asinine. You're purposefully deflecting away from the real issue on this, which is the poor policy decisioning enacted by basically a permanent legislative supermajority in CA.
The real way to get gas prices in line with the rest of the nation would be simple & immediate.
1): REDUCE TAXES & REGULATORY COSTS that are way higher compared to a normal state.
2). INCREASE SUPPLY to stop the MONOPOLIZATION of the oil refinery business. Stop using that stupid proprietary blend of gasoline that's watered down with ethanol that the rest of the country doesn't use.
1. Already stated, tax is a small reason for the increase, but not the full reason. The average tax rate in Cali is about 46 cents more than taxes, and 24 cents more than Florida. This does not reflect on the 2-dollar difference in gas price of Cali vs USA and the 2+ dollar price difference just comparing to SF and OC.
2. I'm sorry... who do you think currently runs the refinery business in CA? It's the same oligopolies refineries across US. What makes you think the pricing behavior will change when it's still sold by the same company?
As for Califonia blend.
1. We produce and need enough gas that economy of scale really isn't a concern compared to the rest of the country. (CA is basically a country within a county in terms of economics)
2. Ethanol blend is actually cheaper to produce per gallon.
to say Calfornia Blend increased the price, it's simply bull shit that people like to feed into your mouth for you to regurgitate, people that actually work in the industry long enough will tell you it's not the reason for our much higher price. many of them are pissed about the price as well because their family members are getting hit by the same ridiculous gas price.
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momopi
Well-known member
Gasolines Prices in Los Angeles County, California
Almanac facts, information and trivia about Los Angeles County, its people, cities and communities.
www.laalmanac.com
morekaos
Well-known member
Have you ever run on ethanol? My suburban is set up for it, and I experimented with it for several months. It’s a crock. It might be 10% cheaper but then it’s 10% less mileage. at best it’s a push at worst it’s a loser, and it eats up food production, and is very likely more damaging for the environment. Just another green scam
morekaos
Well-known member
Thanks for all the help Brandon…it hasn’t “Always been $7.00 a gallon”..You did that
Q Mr. President, can we ask you a couple questions while we got you here?
THE PRESIDENT: If it’s real quick.
Q Yeah. The inflation report is out. Have you seen gas prices around here in LA? It’s seven bucks a gallon almost.
THE PRESIDENT: Well, that’s always been the case here. You know, it’s not — what — nationwide, they came down about $1.35, and they’re still down over a dollar.
But we’re going to work on — housing is the big — is the most important thing we have to do in terms of that.
https://www.whitehouse.gov/briefing...remarks-by-president-biden-in-press-gaggle-6/
Joe Biden: $7 a Gallon Gas in California ‘Always Been the Case’
Q Mr. President, can we ask you a couple questions while we got you here?
THE PRESIDENT: If it’s real quick.
Q Yeah. The inflation report is out. Have you seen gas prices around here in LA? It’s seven bucks a gallon almost.
THE PRESIDENT: Well, that’s always been the case here. You know, it’s not — what — nationwide, they came down about $1.35, and they’re still down over a dollar.
But we’re going to work on — housing is the big — is the most important thing we have to do in terms of that.
https://www.whitehouse.gov/briefing...remarks-by-president-biden-in-press-gaggle-6/
Liar Loan
Well-known member
Ethanol is a special-interest subsidy for farmers. It really makes no sense on any level.
CalBears96
Well-known member
Today Costco gas dropped back to $5.14. So much for tax and regulation bullshit.
irvinehomeowner
Well-known member
Maybe LL or morekaos knows about some tax drop in the last "few days".
Liar Loan
Well-known member
last time the yearly avg under $2 was in 2003, wowzersGasolines Prices in Los Angeles County, California
Almanac facts, information and trivia about Los Angeles County, its people, cities and communities.
Looks like CA tax and fees are less than half the differential compared to other states, it's profit making by the oil industry, need more smaller off brand competition
https://www.pbs.org/newshour/show/w...r-in-california-and-how-the-state-is-reacting
....
Professor Borenstein, thanks so much for being here.
We heard some genuine impacts on people because of these high prices. People will look at what's happening in California and say, aha, it's California's fees and regulations and environmental rules that are driving up the price of gas there. How much of that is true?
Severin Borenstein, University of California, Berkeley: Well, that's definitely a part of it.
California has higher gas taxes than the rest of the country. It has some environmental fees from a cap-and-trade program and a low carbon fuel standard. And it uses a cleaner-burning gasoline that costs a little bit more to make.
But when you add all that up, right now, that accounts for about 85 cents a gallon. That's a big difference. But that's only a part and less than half of the differential we're seeing right now between California and the rest of the country.
....
It is clear that that differential over the last seven years is not at the refinery level, because that spot price of gasoline, the price for giant of shipments of gasoline, is actually about in line with where it should be. The differential seems to be downstream in the marketing, distribution and retailing sector. Those sectors have very complex contracts with the refiners. The refiners have a lot of influence over what they charge.
And it's unclear who's actually collecting the money and why that is so resilient. One of the things that is worth noting is that California has a much smaller share of off-brand stations than the rest of the country. A very small share of our gasoline goes through the mom-and-pop. So we're not seeing the discipline enforced on competition that we would in other parts of the country, where those stations make up a bigger share.
....
morekaos
Well-known member
William Brangham:
“California definitely has a less competitive gasoline market than the rest of the country, partially because we use this cleaner-burning gasoline formulation that we can't trade with the rest of the country, partially because two refiners in California control about half of the entire gasoline market.
So we really do have a potential problem here. The gasoline companies claim that the real problem is various regulatory barriers. And I think that's worth looking into. Unfortunately, the politicians get very interested in this when the price spikes, and then the price comes back down, and, even if it stays a little higher than it should, they move on to other issues.”
“California definitely has a less competitive gasoline market than the rest of the country, partially because we use this cleaner-burning gasoline formulation that we can't trade with the rest of the country, partially because two refiners in California control about half of the entire gasoline market.
So we really do have a potential problem here. The gasoline companies claim that the real problem is various regulatory barriers. And I think that's worth looking into. Unfortunately, the politicians get very interested in this when the price spikes, and then the price comes back down, and, even if it stays a little higher than it should, they move on to other issues.”