Nearly two-and-half million Southern California residents hit the road over the Memorial Day weekend, according to an estimate by the Automobile Club of Southern California.
That was a 5.6 percent increase from last year in car trips of at least 50 miles – the biggest one-year spike in Memorial Day travel since 2010.
That so many more of us were of the freeways this past holiday weekend was a “promising start to the summer travel season,” said Filomena Andre, the Auto Club’s vice president for travel.
Of course, there could have been even more of us making Memorial Day car trips were it not for gasoline prices that averaged more than $3.90 a gallon of regular in Orange County.
Indeed, pump prices today, in OC and much of California, are roughly $1 higher than at the start of the year. And much of that runup occurred in the past six weeks or so.
Some conspiracy-minded observers suggest the uptick is attributable to profit-mongering oil refiners.
Indeed, environmental activist Tom Steyer, a hedge-fund billionaire, and Jamie Court, president of Consumer Watchdog, asked California lawmakers to subpoena oil industry CEOs to explain why pump prices have so increased this year.
Well, we think it attributable to three factors: The roughly 35 percent spike over the past month in the cost of crude oil on the global market; state regulations requiring California refineries to switch over from winter-grade gasoline to costlier “summer blend”; and an explosion at ExxonMobil’s Los Angeles refinery, a strike that shut down Tesoro’s Martinez refinery, and two other refineries going offline for scheduled maintenance.
That perfect storm has created a (temporary) shortage in the supply of summer blend, which was required at all gas pumps in Southern California starting April 1.
Have oil companies profited from the perfect storm? Yes, they have. “But that doesn’t mean the firms are doing wrong,” said Severin Borenstein, a professor at UC Berkeley’s Hass School of Business, during an appearance on CBS News. “If you happen to be selling a product at a time that there’s a real scarcity of it and the price of it goes up, you make a lot of money.”
That’s the unintended consequence of government policy that mandates that California refineries produce a blend of gasoline for which there is no ready out-of-state substitute in the event of a shortage. And that is why the Golden State has the highest-priced gasoline in the entire country.
