Tuesday, January 6, 2015

Surprise! Oil industry lied about massive gasoline price hike in California

On New Year's Eve, gas stations around California were crowded as motorists rushed to fill up their tanks. They had heard the fear mongering from the oil industry that proclaimed a price hike of up to 76 cents was to be expected on New Years Day.

People all over the California are rushing to the gas station to make sure they start the New Year on a full tank.

“I read about it in the paper,” said Randy Salbaugh. Salbaugh made a special trip to the gas station. “I’m gonna run around, get all three vehicles, get’em all filled up and go into the New Year with a full gas tank,” he said.
CBS Sacramento

The oil industry has been using these large estimates to try and scare politicians into delaying the cap and trade law that puts a price on carbon emissions. 

Two self-proclaimed "grass-roots" groups have gathered petition signatures, organized letter-writing campaigns and exerted other pressure to halt what they call a "hidden gas tax" that will hurt ordinary Californians.

The California Drivers Alliance says it "serves as the voice of consumers, farmers, small businesses and fuel suppliers," but it's funded by the Western States Petroleum Association, whose members include Chevron, Valero, BP, ExxonMobil and Shell. Another group, Fed Up at the Pump, calls itself "a grass-roots coalition of consumers, businesses and advocates" but includes the California Independent Oil Marketers Association.
San Jose Mercury News

 All the Republicans were on board to repeal the law, of course, and even some Democrats were swindled in, claiming the new tax would hurt the poor. Never mind that money from the tax has been earmarked to various programs which would help the poor, such as improved public transit. And of course, controlling carbon pollution helps everyone equally.


Clegern said hundreds of millions of dollars from the permit auctions will go to the same disadvantaged parts of the state that the cap-and-trade foes say they're trying to defend and will pay for energy-efficient affordable housing, mass transit, cleaner cars and more.

Well, it would help everyone except the oil industry, who would have to pay to pollute. Making people pay for external costs they create, a shocking idea for that bunch!

California's Global Warming Solutions Act of 2006 called for a cap-and-trade program phasing in an economywide limit on major greenhouse-gas sources such as refineries, power plants, industrial facilities and transportation fuels. The cap is lowered by about 3 percent per year to steadily reduce the state's overall emissions. Industries in the program must reduce their emissions or buy pollution permits.

Supporters of the law acknowledged that the prices would rise - after all, that's part of the point. However, they predicted an increase of 6 to 10 cents a gallon. 

We're now entering the 7th day of the new year (that was fast!) so it should be a good time to see who was right.

From gasbuddy.com:
 photo gas1_zps36f7127e.png


It looks like on 12/31, gas prices were at $2.64. They then went down two more cents, and are now at just under $2.66.

That's an increase of 2 cents! Surely worth waiting in a gas line for 15 minutes!

Now to be completely fair, we have to compare to nationwide pricing.
 photo gas2_zps84a3c913.png



12/31, the average US price was $2.24. A week later, $2.19. That's a decrease of five cents.

So in reality, California gas prices went up by 7 cents against national pricing.

Would you look at that, exactly what the experts, and not the industry lobbyist, predicted.

What a surprise!

Of course, consumers wouldn't have even noticed a larger price hike. Gas prices are incredibly variable, both in time and in location. Using Gas Buddy again, let's take a look at one square block in Fresno
 photo gas3_zps4330d83a.png


2.39
2.49
2.55
2.55
2.75


People are willing to tolerate price differences of up to 40 cents a gallon in about a 30 second driving distance. After all, if people cared so much about their pennies, we'd expect every station to charge the same, but we all know that one station charging 20 cents more than another across the street is incredibly common.

These price variations mean it's actually really hard for people to notice the differences. prices go up, prices go down, prices vary from block to block. In all that noise, 2 cents means nothing. 

To top it off, the 2 cent hike comes at the time of the lowest prices in over half a decade, meaning the minor increase is even less noticeable. As oil keeps going down, prices will probably be at $2.60 by next week. 


 photo gas4_zps4a7cf5b7.png

It's a good thing the attempts by the oil industry failed. Aside from the value the carbon tax will create, you'd be hard pressed to find a better month in the past two decades to phase it in.

It's just a shame the federal government wasn't able to finally get their own gas tax increase in.


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