Posted on 08/15/2006 4:56:07 PM PDT by NormsRevenge
HOUSTON (Reuters) - No evidence of market manipulation was found by the California Energy Commission in an investigation of an April-May spike in retail gasoline prices, the state's undersecretary for energy affairs said on Tuesday.
Unplanned refinery shutdowns, declining inventories, lower fuel shipments to the region and clogged ports combined to send California gasoline prices 47 cents above the national average by early May, said Joseph Desmond, undersecretary of energy affairs.
"The commission did not find a smoking gun," Desmond said. "The market operated in a fashion you would expect a market to operate."
California Attorney General Bill Lockyer's investigation of possible criminal activity in the price spike is still underway.
Consumers paid an extra $1.3 billion due to higher gasoline costs, according to the report.
The commission found California's refineries had three times as many days of unplanned shutdowns between January and June of 2006 compared to the same period of 2005.
Refineries had 175 days of unplanned work in the first six months of 2006 compared to 58 days of unplanned work in the same period of 2005.
Gasoline production levels fell to five-year lows because of the unplanned outages, the commission said.
Those outages came at the same time California refiners were reducing inventories of winter-blend gasoline before the spring, when the state switches over to gasoline blended for use in the summer.
In April and May, refineries had nine unplanned outages lasting a combined 75 days, compared to six outages in April and May of 2005 lasting a combined 50 days.
Congestion at the state's ports delayed the arrival of gasoline imports in late April.
Exports of gasoline to Nevada and Arizona were higher than normal in the first six months of the year and imports of gasoline to Arizona from Texas were lower than normal, the commission said.
California tends have steeper and longer gasoline price spikes because it is functionally isolated from refining centers on the U.S. East and Gulf Coasts, Desmond said.
How much of the "extra $1.3 billion" they talk about was taxes?????
The dot commers of today.
We would be much better off investigating incompetent politicians who spend our tax dollars investigating the free market.....and then retire them from office.
Folks....this is not rocket science. When a certain commodity (refined gasoline) becomes scarce, the market does an extremely natural thing. It causes prices to go up.... thereby lessening the demand. If you have production problems it will sometimes cause the commodity to become scarce. DUH!
I get tired of listening to this crap about a manipulated market and I get tired of stupid politicians who think they can tweak it. Gasoline, as a percentage of our budget, is still lower in cost than it was during the Jimmy Carter era.
"Lockyer" would do better to investigate his own lack of common sense.
Unplanned refinery shutdowns, declining inventories, lower fuel shipments to the region ... combined to send California gasoline prices ...
Ummm... if you wanted to manipulate the market, isn't that exactly how you'd do it--limit supply?
Doesn't make much sense when your volume decreases correspondingly.....and this is exactly what happens during price spikes.
I own a service station. At normal prices I pump 5000 gallons a day. I make the same amount of money on each gallon no matter what the price is. When gasoline prices begin to spike you can figure my volume will drop 200/300 gallons a day immediately until it gets down to about 3500 gallons a day.
Let's assume that I gross .10 cents a gallon. That means my gross income drops from $500.00 daily to $350.00 daily. The 1500 gallons is usually discretionary driving....weekend jaunts, etc. This also means that I purchase less gasoline from my supplier....and that affects their income the same way.
Can you survive a 30% drop in your income? No....the market is not manipulated. The market is driven by supply and demand.....and shortages are natural....and cause prices to rise. Over abundance and supply will cause prices to drop. ECON.101
Isn't that what I said? --manipulate the market price by limiting supply.
I didn't mean at the retail level.
What I was trying to get across, I guess, was the fact that income is reduced all the way up the line. So yes, limiting the supply purposely would be manipulating the market....but what would be the point? Your income is reduced correspondingly by lesser volume.
If one would like to make less money than one would limit the supply. Usually, no one wants this scenario.
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