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Export, Baby, Export: And Keep Gas Prices Up

As gas prices spiked in California last month to blow past even Hawaii’s highest-in-the-nation, the state’s refineries were exporting gas. That’s right, exporting, just like the rest of the nation’s refineries. According to the Energy Department, we are now net exporters of fuel for the first time since 1949.

According to The Los Angeles TimesCalifornia’s exports aren’t broken out of the nation’s average of more than 107 million gallons a day exported through August of this year. But according to data from U.S Customs Districts in California, supplied to the Commerce and Energy Departments, and parsed by the Times, refiners here exported almost 38 million gallons of gasoline and almost 118 million gallons of distillates in July alone.

Refiners say that selling any “excess” gas that consumers aren’t buying is a good thing for workers and shareholders. Well, don’t buy it. There is no such thing as surplus gas. It’s gas that could help mitigate prices when refineries have glitches, from fires to outages. But when refineries export gas, that helps bump up its price on the domstic market. It's why oil companies are so gung-ho on the Keystone Pipeline that would bring crude from Canada to the Gulf. "All the oilies want the Keystone Pipeline built so the oil gets to the Gulf refineries," says one industry analyst. "But, wait a minute, the pipe will also allow it to be placed on ships and exported out of North America. That will remove our surplus, and raise prices to match OPEC." 

You might like that if you are a California farmer getting royalties for the oil under your land. You might not if you are a consumer who could eat better food if you paid less for gasoline. We say regulate the state’s supply of gasoline to have more than 10 to 13 days on hand. Most states have more like 24 days on hand. And keep further consolidation from happening. As it is, we have only 14 refineries making gasoline for the world’s ninth largest economy. We’ll have even less control over supplies if Tesoro acquires the BP refinery in Carson. The California Attorney General should block that deal. Otherwise, Tesoro and Chevron will control 54 percent of California’s gas market. Don’t be surprised if, in that scenario, exports only rise.