You can’t turn on a TV or radio in California these days without hearing the oil companies and their industry associations complaining that the state can’t afford to move to cleaner fuels and predicting that cutting pollution from the transportation sector will drive up gasoline prices.
What the oil industry’s $56 million political campaign, and even wider reaching ad campaign, doesn’t say is that if gas prices do go up this year, it is likely to be the oil industry—not clean energy—that’s to blame.
Since 2005, the price of gas in California has fluctuated by an average of $1.16 per gallon, while diesel has fluctuated by $1.01. Year after year, prices at the pump shoot up – yielding significant additional profits for fuel suppliers – then casually drift down back to a point higher than where they started. The phenomenon is so well known, industry insiders call it rockets and feathers.
The oil companies say they don’t cause these fluctuations, but the problem is so severe that Governor Jerry Brown and the state legislature just gave the California Energy Commission $342,000 to investigate and prevent gas price fixing and market manipulation by the industry.
Market domination can lead to price manipulation
Transportation fuel is a concentrated market where a handful of suppliers control a product everyone has to have. Small and large businesses, commuters, soccer moms, motorcycle clubs—pretty much everyone needs the gas and diesel supplied in California by just 22 companies, six of which (Chevron, Tesoro, BP, Phillips 66, Valero and Shell) control 90 percent of the total supply. Read More