Tuesday, March 29, 2005

The California Gas Fraud

Have you ever wondered why people here in the great State of California pay up to 50 cents more on a gallon of gas than elsewhere around the country?

One might want to say that it’s the 45.2¢ in Federal and State Gas taxes paid on every gallon. Considering the average tax on a gallon of gas nation wide is 40.5¢, that doesn’t even account for a tenth of the difference.

The real problem is that California is a closed gas market. Because of environmentalists, it is illegal to import the nationwide blend of gas, known as Federal Reformulated Gas, or FRG. Instead, Californians are forced to deal with whatever amount of California Reformulated Gas, or CRG, that the refineries feel like producing.

The first problem here is that the refineries here in California, which theoretically have enough capacity to keep the state awash in CRG use their excess capacity to produce FRG, which can then be sold to the other 49 states. Why would they do this? So they can make more money. It is not in their interest to flood California’s gas market, nor is it in their interest to let their excess capacity sit idle, so they use that capacity to make another profitable product. Good for them.

The second problem is the way CRG decimated the private service station in California. Before this whole CRG business started, my hometown, Novato, had three privately owned service stations. Now it has none. In fact, I only know of two privately owned stations in the entirety of Marin County. The rest of the stations are all owned by an oil company. Why? The first version of CRG contained a high concentration of MTBE. One of the problems with this is that it will eat through a normal underground fuel tank. They found that out because it actually ate through underground tanks when it was first implemented. (Of course, the state never thought of testing this formulation before it was implemented to see what would happen, but more on that later.)

What was the state’s response to this? They ordered that every underground tank in the state be replaced with an MTBE-resistant one. Now, the state didn’t offer any relief program for this, even though it was a major expense forced upon the stations by the state. (Talk about an unfunded mandate.) Unfortunately, many privately owned stations could not bear the expense and were forced out of business. California was left with the vast majority of stations owned by the same companies running the refineries.

Many people out here in California might say that all this is worth it since it’s leading to major air quality improvements. Aye, but there’s the rub. California Reformulated Gas has cause no improvement in air quality. CRG is slightly cleaner burning per gallon than FRG, but that is because it contains less energy per gallon. Now, it takes a certain amount of energy to propel a car a mile, which is where mile per gallon ratings originate. Therefore, it takes more CRG per mile to propel the same car. Same amount of energy, same amount of exhaust. It’s basic physics.

Oh, but that’s not all. Do you remember the whole underground tank bugaboo? The reason they started suspecting leaking tanks was because MTBE was turning up in ground water. MTBE is dangerous stuff. When it’s being transported to a refinery, it has to be treated as a hazardous material. It’s a carcinogen. Worst of all, it leeches into water very quickly.

So, we’ve been paying 50 cents more a gallon for what? No improvement in air quality and poisoned ground water. Californians have shown themselves to be a powerful bunch when angered. Well, we should be angry about this, damn it! We have been fleeced for billions of dollars over the last 9 years. Now that gas prices are hovering around $2.50 a gallon, we should say we aren’t going to take it anymore. We can't afford to take it anymore.


The first thing we need to do is start spreading the word about all this. I suspect that many Californians will be outraged when they learn the truth about their gas prices. Next, we need to begin writing our governor and state legislators demanding that the state allow the sale of FRG in California. If the state government won’t push for change, then we need to use our power as citizens to push for an initiative which will overturn the environmental regulations behind this fraud.


For more information, take a peek at this fantastic article by Dr. Bill Wattenburg, who has been informing his listeners on about this issue for almost a decade now. If you want to listen to Dr. Bill, he’s on KGO-AM 810 (San Francisco) on Saturday and Sunday nights from 10:00 PM to 1:00 AM. You can also listen online at http://www.kgoam810.com/.

TOPIC: California
TOPIC: Politics