California gas price panel hits rocky patch

OREANDA-NEWS. July 13, 2015. A panel of academics and experts convened by the California Energy Commission (CEC) said it may not have sufficient access to data it needs to understand the influence of participants in the state's gasoline and diesel markets.

The Petroleum Market Advisory Committee has been tasked with looking into the state's notoriously-volatile gasoline market and determine why state fuel prices are significantly higher than in the rest of the country this year. This includes looking at any effects from the state's Low-Carbon Fuel Standard (LCFS) and greenhouse gas cap-and-trade programs.

Committee members said yesterday they are unable to gain access to detailed commission data that would let them do analyses of market power, or the ability of a participant to influence prices, for the products markets because of business information confidentiality requirements. Commission staff floated the option of doing the analyses themselves and then sharing the results with committee members. But it was unclear if that would be sufficient for the committee to fulfill its mandate.

Commission member Severin Borenstein, a professor at the University of California, Berkeley, called the situation the worst of both worlds, because the panel has to meet all of the public meeting and openness requirements of California government without any of the additional data.

The difference between retail California gasoline prices and those in the rest of the US for reformulated gasoline has roughly doubled so far this year to 52.1?/USG from 26.3?/USG in 2014.

Less than a third of the increase may be attributable to the expansion of the cap-and-trade program to cover GHG emissions from the use of transportation fuels, commission analyst Gordon Schremp said. Schremp attributed much of the upward pressure to unplanned and extended refinery outages, along with the normal seasonal swing in California gasoline prices of at least 60?/USG at the beginning of the year.

LCFS credit prices have spiked in recent weeks from \\$22/metric tonne to around \\$50/t. Sam Wade, head of the LCFS regulation at the state Air Resources Board, said the agency monitoring the increase but it would not comment on what it believed was driving the increase.

California has its own specification of gasoline that meets more stringent environmental standards than normal reformulated gasoline in the US to help address the state's unique air pollution issues. Only a handful of refineries outside of California can meet the specification, making the state somewhat of an island in the overall US refined products market. The state's refiners have also had issues gaining access to cheaper US mainland crudes because of infrastructure issues and permitting delays.

The group Consumer Watchdog said some refiners have started charging their branded fuel stations a premium of about 30?/USG for their fuels compared with the unbranded gasoline market. The group called on the state's attorney general to launch a formal investigation.