Art by Peau Porotesano
As gasoline prices are decreasing nationwide, it is apparent that we aren’t reaping any benefits here in Malibu. Many disgruntled students have expressed their dissatisfaction with the stark contrast between gas prices at home and the prices they are confronted with at school. Why are the prices declining elsewhere and remaining so high in Southern California?
According to the California Gas Buddy website, gasoline prices in Malibu are around the $3 mark. This is a vast difference from places like Austin, Texas, where gas prices are averaging around $1.40. In fact, the national gas price average dropped to $1.83 for regular gas, according to the AAA Daily Fuel Gauge Report.
With gas prices remaining almost double that in California, I feel that it is important for us to explore the reasons for this extreme difference instead of just complaining. It often rings true that educating ourselves to see the real cause behind frustrating situations is more beneficial than simply whining about their immediate effects. That being said, let’s educate ourselves so that we can make smarter decisions in terms of gas consumption.
To start, we have to look back to the 2015 explosion at the ExxonMobil refinery in Torrance, California. This refinery used to produce 10 percent of California’s overall gasoline supply, and the explosion greatly affected its ability to process oil into gasoline, according to a phone interview with Senior Petroleum Analyst at GasBuddy.com, Patrick DeHaan.
Because the state no longer has multiple smaller refineries, one explosion like this can slow production down immensely, according to DeHaan. If a refinery went down 20 years ago, other refineries would pick up the slack, but now that the refineries are so large, it takes longer to get them back to where they were, he said.
“Until that refinery is fixed, prices will remain higher,” DeHaan said.
Additionally, the gasoline supply in California is connected by very few if any pipelines, in contrast to the Midwest, where pipelines are abundant. California has relied on gasoline coming in from as far as Asia to balance out the market, DeHaan said. This isolation spikes the prices we see as consumers.
“California is a bit of an island with gasoline supply,” DeHaan said.
Another reason for these increased gasoline prices is a matter of competition and affluence. Many gas stations vary in how they choose to set their prices, based on the affluence of the community and competition in the area, DeHaan said.
“In affluent areas, they charge more because people are less price-sensitive,” he said.
Lastly, many consumers view oil prices as directly related to gas prices, but refineries create a middle man that can alter the prices.
“A lot of people think that oil companies arbitrarily set prices and raise and lower them as they please,” he said. “The fact of the matter is that oil and gasoline are commodities that fluctuate based on supply and demand.”
Currently, the demand is seasonally low as Americans are less likely to embark on road trips in the winter, according to DeHaan.
Gas prices are affected by a number of factors that are easy to overlook. The main factors affecting California’s prices seem to be the refinery explosion, lack of pipelines and the affluent community here in Malibu. Unfortunately, as long as consumers demand gasoline and the Torrance refinery is in repair, prices will likely remain high.
After understanding the reasons for these high prices, there are some possible options to avoid the repercussions of these steep prices. One solution is to make more cost-efficient choices and choose gas stations in less affluent areas, or ones where competition from nearby stations are driving the prices down. Additionally, as students living in a larger community, it’s not too difficult to establish carpool groups and help each other save on our overall gasoline consumption.
If you want to stay updated on gasoline prices, make use of GasBuddy.com, which will tell you the average prices in most U.S. cities. This feature can be incredibly beneficial when deciding on modes of transportation or when and where you will decide to fill your gas tank.
Although it can be frustrating when your tank costs $60 to fill up, don’t get lost in the immediate annoyance without trying to see the wider view. Although it seems difficult, there are small ways we can mitigate the effects of these steep prices, it’s just a matter of taking the time to do so.
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Follow Rachel Littauer on Twitter: @rachelitt23
