The Los Angeles Daily News
Selling a single grade of gasoline at the pump would put a cap on incessant price spikes in California, ending refiners’ ability to manipulate supplies, according to a study released Wednesday.
Though motorists with fancy cars might cringe, the Foundation for Taxpayer and Consumer Rights said going to a single grade with an octane rating of 87 or 88 is a solution “to keep pump prices under $2.”
The Santa Monica-based consumer group found that California drivers are overpaying billions for gasoline because West Coast refiners have manipulated supplies. The result: gasoline prices are artificially high.
“And if this continues to go on, price spikes will always be a way of life for California motorists,” said Tim Hamilton, the study’s lead author. “But this is not going to fix itself. We need people to understand the issues in these smoke-filled rooms.”
While a gasoline island stocked only with single grade of gasoline provides no premixed alternative for cars lacking pep, it would ultimately free up storage space. The state could then use the space as a publicly operated strategic fuel reserve to combat higher prices, Hamilton said.
For those clunkers and high-performance cars that need a little extra juice, Hamilton said, the gas station can easily provide a bottle of octane boost at the pump.
Steve Mazor, chief auto engineer for the Automobile Club of Southern California, doesn’t think bottled octane is a reasonable alternative. “First of all, you’re dealing with a highly toxic substance and if you pour it into your tank you may get it all over your hands,” he said. “And also drivers will have to deal with the inconvenience of purchasing the extra octane separately.”
California consumers overpaid approximately $ 2.3 billion at the pump last year, the study contends. But Fred Gorrell, a spokesman for San Francisco-based ChevronTexaco Corp., said converting a pump to a single grade just isn’t practical.
“To save storage space when demand doesn’t change doesn’t wash as a concept,” he said. “And though prices are higher it doesn’t mean anyone is making profit.”
In the second quarter, ChevronTexaco saw its profits plunge 81 percent as a result of investment losses in energy trader Dynegy Inc. and lower gasoline prices.
Losses aside, Jaime Court, FTCR’s executive director, said California drivers could have saved 16 cents per gallon, or $ 2.8 billion, if there was a state reserve. “Those oil companies are doing a big con job,” he said. “And if we go to war in the Middle East, then we really need to protect against refiners and crude manipulation.
Hamilton and Court, who were both members of California Attorney General Bill Lockyer’s gasoline task force in 2000, have outlined several recommendations to curb gasoline prices.
Among the suggestions is utilizing the purchase power of state and local government to enter into contracts with outside refineries for regular supply. That supply could then be used for the strategic reserve to increase inventories and remove competitive insulation of local refineries.
But Bob van der Valk, gasoline wholesaler with Cosby Oil Co. of Santa Fe Springs, said working with the government will never happen. “That’s like federalizing a private industry,” he said. “You just can’t do that.”
Hamilton and Court are both calling on the state Legislature to create a bill that would mandate a single grade at the pump. Court said by Jan. 1, “we’ll have a good idea of where things stand.”
In the past several weeks, gasoline prices have remained relatively stable in Los Angeles, rising slightly across the county.
The average price of self-serve regular gasoline in the Los Angeles area Wednesday was $ 1.63 per gallon. On Friday, regular gasoline was $ 1.605 per gallon, four-tenths of a cent less than the previous week, according to the Auto Club.