By MADISON HIRNEISEN
THE CENTER SQUARE
(The Center Square) – After California gas prices reached near-record levels last week, the average price for a gallon of gas is starting to drop, though drivers are still paying the highest prices in the nation.
California gas prices have fallen 24 cents since last week, settling at an average of $6.107 per gallon on Saturday, per AAA. That average price is still about 67 cents higher than a month ago when the average price for a gallon of gas was $5.434. California’s average prices remained more than $2 over the national average, which stood at $3.90 on Friday. The average price in Santa Barbara County on Saturday was $6.105.
Experts say that the spike in gas prices California saw earlier this month resulted from refineries going down for maintenance in September, causing a shortage of the state’s “summer blend” of gasoline. To address the high prices, Gov. Gavin Newsom directed the state’s Air Resources Board to allow refineries to begin distributing the “winter blend” of gasoline earlier than usual to drive down prices.
Refineries coming back online and the winter blend being distributed is why prices are now “dropping rapidly,” AAA Spokesperson Marie Montgomery told The Center Square in an email. Montgomery noted that wholesale gasoline prices in Los Angeles have “plunged well below the level they were at when the gas price spike started in September.”
“Wholesale prices are now 50 cents higher than their lowest point of the year in January, back when pump prices were $4.70 a gallon or so,” Ms. Montgomery said. “If these trends continue, we should expect further rapid price drops at the pump.”
Gov. Newsom has blamed high prices on oil companies engaging in “rank price gouging.” Last week, the governor announced he would call a special session of the Legislature in December for lawmakers to discuss his proposed windfall tax on oil companies.
Five refiners – Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero – produce 97% of the state’s gasoline supply, according to a report released this month by Consumer Watchdog. The report contends that proof of the “Golden State Gouge” is evident in the companies’ profit reports from the second quarter.
“All five refiners raked in unprecedented profits per gallon in the West – profits of between 79 cents and $1.01 per gallon,” the report states.
At the end of September, California Energy Commission Chair David Hochschild penned a letter to oil executives, asking for an explanation as to why gas prices rose dramatically “despite a sharp downturn in global crude prices, no significant unplanned refinery outages in the state, and no increases in state taxes or fees.”
Several refiners responded to the letter earlier this month, claiming that the state’s laws and policies are to blame. Valero Vice President of Government Affairs Scott Folwarkow responded to Mr. Hochschild in a letter saying the Golden State is the “most expensive operating environment in the country and a very hostile regulatory environment for refining.”
“California policy makers have knowingly adopted policies with the expressed intent of eliminating the refinery sector,” Mr. Folwarkow said.
Gov. Newsom’s office tweeted Thursday that “oil companies saw the biggest one-day wholesale price drop ever after CA took action to lower gas prices.”
“But those savings aren’t being passed to you. It doesn’t add up,” the tweet continued. “Time to take the windfall profits of greedy oil companies and put that $$ back in your pockets.”
News-Press Associate Editor Matt Smolensky contributed to this report.