California Consumer Group Says One Gas Grade Could Curb Prices

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Associated Press

SANTA MONICA, CA — Californians could save billions of dollars if oil companies were forced to offer only a single grade of gasoline, a consumer group estimated Wednesday.

A law requiring stations to offer only one grade of gas with an octane of 87 or 88 “would greatly reduce the ability of oil companies to create price spikes” by artificially lowering supplies of the most sought-after gas, said the study released by the Foundation for Taxpayer and Consumer Rights.

By eliminating underused premium and mid-grade varieties, the state could free storage space for a public fuel reserve that could be used to cushion higher future prices, according to the two-year study.

“Rather than drill in the Arctic, let’s clean the pumps of the 50 percent of higher-octane fuel that is not used,” Jamie Court, executive director of the foundation, said in a statement.

About 95 to 97 percent of California cars could use the single grade and motorists whose vehicles need higher octane could use additives, the study argued.

The study, conducted by a gasoline industry consultant, concluded that Californians could have saved about $2.8 billion for gas last year, or about 16 cents a gallon, had its recommendations been in place.

California’s clean air regulations have required refiners to make costlier clean-air formulations of gasoline. But the study concluded “inflated refiner profit margins” are really to blame for most gas price hikes in the state.

“West Coast gasoline refiners have manipulated supplies to keep gasoline prices artificially high,” the study alleged.

John Felmy, chief economist with the American Petroleum Institute, denied the allegation.

“The oil industry has been the subject of dozens of investigations over the years, and they all have exonerated us,” Felmy said.


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