Rising gas prices in California led two state lawmakers to hold a hearing in San Francisco today seeking explanations.
State Sen. Mark Leno, D-San Francisco, chair of the state Senate Select Committee on Bay Area Transportation, held an informational hearing at San Francisco’s State Building this morning to discuss the oil refinery industry and gasoline prices in the wake of the Richmond Chevron refinery fire in August and a statewide gas price spike in October.
Leno, along with state Sen. Loni Hancock, D-Oakland, led the two-plus-hour long panel at a conference center at 455 Golden Gate Ave. with refinery, gasoline and energy experts, including speakers from the California Energy Commission and Western States Petroleum Association.
Leno addressed issues including the highest recorded gas prices for California consumers this year, particularly in October, and his worry that refinery and oil companies are profiting at the expense of working class residents.
“It’s not quite a monopoly,” he said, but “it’s looking like an oligarchy,” Leno said, referring to the seven oil companies operating in California.
He posed the overarching question of whether or not the oil industry needs more stringent regulation by the state, adding that the discussion of how gas prices are set was overdue at the state level.
“At what point should the state step in and say we are going to put in regulations?” he asked.
Tupper Hull of Western States Petroleum Association overviewed the oil industry in California, which is often described as a “fuel island” because of its lack of pipelines and dependence on tankers to bring in imported oil.
“Every drop of oil we don’t produce here comes here in a tanker,” he said.
There are 14 oil refineries statewide, with five in the Bay Area, including the Richmond Chevron refinery, which sustained a large-scale blaze on Aug. 6 when a corroded pipe exploded.
“We have a tremendous appetite for petroleum in California,” he said.
California uses 14 billion gallons of fuel per year, according to experts.
Leno expressed concern about a record-high price on Oct. 8 when gas stations statewide were averaging $4.67 per gallon.
Now in mid-November, retail prices have dropped below prices before the Aug. 6 fire in Richmond, according to Gordon Schremp, senior fuels specialist with the California Energy Commission.
As to the impact of the Richmond refinery fire, Schremp said there is evidence that refineries can still produce at some level during maintenance shutdowns or unexpected events, but that gas prices often go up following those disruptions with holds on output.
Any scheduled shutdowns are something Leno and Hancock repeatedly noted should be public knowledge, to ensure refineries do not bump up gas prices when demand goes up, especially at the start of summer.
After hearing from other experts, including Severin Borenstein, director of the University of California at Berkeley Energy Institute and energy consultant Robert McCullough, Leno concluded that the committee did not know enough to make a determination as to what legislative action was needed regarding the state’s oil industry.
However, he said it has become evident information about refinery procedures needs to be more publicly and readily available.
“I’m afraid if we do nothing…I’ll be surprised if the (gas price) spikes go away,” he said.
Sasha Lekach, Bay City News
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