City News Service

LOS ANGELES — During an Assembly committee hearing in downtown Los Angeles today, consumer advocates, industry representatives and economists presented their theories about the root cause of the recent gas price spike.

Assemblywoman Jenny Oropeza, D-Carson, chairs the Transportation Committee convened to examine why gasoline prices reached an all-time average high of $2.20 in Los Angeles this month. “This is, indeed, affecting every family and many, many businesses in our state,
” she said.

Sen. Joe Dunn, D-Santa Ana, said the soaring prices are due to “dysfunctional, anti-competitive market behavior.” “We don’t have a crisis in gasoline, we have a crisis in economics,” he said, likening the situation to the electricity shortage a few years ago.

Jamie Court, president of the Santa Monica-based Foundation for Consumer and Taxpayer Rights, said he believes a small group of refineries manipulates the market by keeping the system running on low inventories. “This market is all about cheating — not competing,” he said, adding that California now has 13 refineries, compared to 33 in 1981.

Court, who was a member of Attorney General Bill Lockyer’s task force on gas pricing, said a key solution is to ensure the state has adequate refining capacity.

But Anita Mangels of the Western States Petroleum Association disagreed with Court’s theories. “There is no artificial manipulation of inventories,” she said. Mangels said the state’s gasoline tax — more than 50 cents a gallon — has kept the industry from building refineries in California. “Costs of doing business here have gone up astronomically,” she said.

She also said the state’s high environmental standards and the threat of California residents protesting refineries being built in their neighborhoods have also scared gas companies away. “It just doesn’t make sense to build a refinery in California,” she said.

A hearing to consider possible legislation on fuel prices is scheduled for next Thursday in Sacramento.