Gas prices in California are 55 cents per gallon higher than they were this time a year ago. The state’s gas industry watchdog hasn’t uncovered any evidence that refineries have been price gouging, but they have identified some factors in recent price spikes.
According to the California Energy Commission, part of the issue is that there’s no incentive for refiners to ease prices, and no cap on how high profits can go. Oil industry expert Andy Lipow explained why prices go "up like a rocket ... but down like a feather."
“At the retail level, we see many of the retailers which are individually owned, you know, are slow to react to that lower wholesale price, and that’s their opportunity to make money,” he said.
Lipow said another reason why gas is so expensive in California is because the state has shut down refining capacity, which impacts the supply.
“Every time we see an unscheduled refinery outage, gasoline spices, as a result, spike,” he said.
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Some positive news: Lipow predicts prices will drop about ten cents in the next couple weeks due to falling crude oil prices.
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