Thursday, February 24, 2011


Already we have Brent North Sea Crude trading at $119 USD per barrel, gasoline prices jump 11.2 cents per gallon in just a week, there are predictions that gas prices in California will go above $4 a gallon in a few weeks (well before the start of the summer driving season) If that wasnt enough looks like it will go much higher much faster. 

"We use a special blend of gasoline that's only used in California, and that is to control air pollution."

You read it right!  Brad Barbeau, Assistant Professor at the School of Business at CSUMB, says what you're putting in your car is helping to curb the pollution problem.  The problem is that it's more expensive to formulate compared to what other states use, so it hits you in your pocket.  Not to mention there's only 13 refineries in the state that make it.
"The amount of gasoline that's produced by those refineries is just about exactly equal to the amount of gasoline that's demanded," says Barbeau.  "So our market is very sensitive to changes in supply and demand."
Don't forget the taxes.
"In addition to the federal tax that everybody pays, we have an 18% state tax on gasoline," says Barbeau.  "Plus the local 7.5% sales tax."
The unrest in the Middle East is helping to drive those prices up as well, but Barbeau says to keep this in mind.  Libya exports only 2% of the world's oil supply and production is down by about 50%.  That means only 1% of the world's oil supply is interrupted at the moment. 
While Barbeau doesn't know how long prices will continue to rise, all eyes are on California.
"Who are you going to watch?  The one who's at an average price or the one who's going to hit $4 a gallon first," asks Barbeau.  "They're watching us because if we're going to hit four dollars a gallon, which we may very well, it'll be California that gets there first.  As always, we lead the nation."
As I said yesterday this will have a an impact both strong and subtle on anime conventions this summer. Unlike in 2008 when gas prices spiked during the summer after people already booked hotel rooms and made travel plans, prices are now spiking still in the middle of winter when people make their decisions.


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