California is short of refinery capacity

The ongoing issue about California's high gas rices is resurfacing.  Regulations prohibiting new refinery capacity is one of the issues,supply controls imposed by Sacramento. The other issue is California's new gas tax hike.

California's stubbornly high gasoline prices in 2015 resulted from state regulations, trouble with imports and an outage at a major refinery, the oil refining industry told regulators Wednesday.

Speaking to the state Petroleum Market Advisory Committee for the first time since expensive California gasoline brought huge profits to oil refineries this year, the Western States Petroleum Assn. said the unusually large gap between the state's average price for a gallon of regular gas and the national average involved matters out of the oil refinery industry's control.

“Clearly, there is a regulatory component for the situation that occurred this year,” said Tupper Hull, vice president of the petroleum group. “As this committee looks at the continuing differential in prices, that's an area we would recommend you look at.”

In addition, Skip York of research firm Wood Mackenzie, speaking on behalf of the oil refining industry, said that as gas prices in California peaked in July, foreign and domestic sources had trouble delivering product to the state.

No tankers were available in the Gulf Coast to bring fuel to California. Better deals were available to suppliers such as India, as global demand for gasoline this year has soared.

“It's not going to be economic,” York said suppliers ultimately determined. “It was now more attractive for me to sell into a closer market than California.”