$5 Gasoline -- Here We Go Again -- August 28, 2014

Screen shot:

Gasoline prices in Los Angeles in past 24 hours.

The "funny thing" about this: one needs to understand the "geography" of Los Angeles. Yes, one can find "less expensive" gasoline, but folks in Santa Monica are not going to drive to Norwalk to buy less expensive gasoline. The $4.99 price one sees above is what folks are paying for gasoline in Santa Monica. Sure, there will be some competition and some less expensive locations, but these locations (Olympic and Fairfax; Pico and 20th; Wilshire and 26th) are high volume locations.

The ARCO stations offering a lower price are outliers in the sense that they only take cash and the ARCO card (as far as I know; I only know what my wife tells me). My wife only goes to ARCO when she is out in California and only pays cash. ARCO is big in California but by no means the "norm." So, to some extent, one can ignore the $3.99 ARCO prices. I doubt very many folks in California are paying $3.99. The Shell prices are closer to reality.

So, $5 gasoline.

On January 1, 2015, Californians will "absorb" another price increase in gasoline. 

Californians already pay the nation's second highest gas tax at 68 cents a gallon -- and now it will go up again in January to pay for a first-in-the-nation climate change law.

It's an indirect tax at the pump so no one knows how much it will actually affect the price at the pump. Perhaps it won't affect the price at the pump at all. Perhaps ARCO and Shell will "eat" the cost because they "like" their customers. Perhaps a good old-fashioned "price war" will break out in California dropping gasoline to 35 cents/gallon. Maybe Costco and grocery stores through loyalty programs will knock off $2.00/gallon.

But this is what the analysts say:

Estimates of the cost of the tax vary. The California Air Resources Board, the Golden State's premier anti-pollution agency, predicts the new tax will raise gasoline prices from 20 cents to $1.30 per gallon. A prominent state senator who helped author the bill estimated the cost at 40 cents a gallon. Environmental activists downplay the cost, but hail the impact.

First of all, we all know, gasoline is not going to jump $1.30/gallon on January 1, 2015, in California.

And another 20 cents/gallon -- won't even be noticeable. Even 40 cents/gallon represents only a ten percent increase (based on $4.00 gasoline); I think the US Postal Service has been raising first class postage at a rate exceeding 10 percent. And life goes on.

Whatever.

On another note, the price per gallon is irrelevant. The cost of gasoline as part of a family's entire budget is the issue. If the teen-ager is no longer allowed to use the family car, the family's gasoline expense can be cut dramatically. If the family's wager-earner takes the bus to work, the gasoline expense can be cut dramatically. Farmers/processors/restaurants will simply pass on any increased cost of diesel on to the customer buying avocados at the grocery store/restaurant. Guacamole dip is not the end-all be-all.