Low Oil Prices And US Driving Data, And Again, Why Is The Price Of Gasoline So High In California? -- November 24, 2015

Earlier this morning, I posted these Jack Kemp tweets:

• US traffic volumes have grown 3.5% over last 12 months, compared to prior 12-month period, fastest gain since 1997
• US traffic surged 4.3% in September compared with prior-year, according to Federal Highway Administration

I didn't really pause to think about that ... I was moving along quickly to get things posted, but those data points are incredible. The 4.3% increase year-over-year is one thing, but the fact that traffic volume growth has shown the fastest gain since 1997.

Since 1997 ... that's almost twenty years ago.

The current oil price slump began one year, October, 2014. The growth would have been even greater had the state with the most miles driven, California, shared in the low oil prices.  

Energy Institute at Haas posted this note and graph on September 28, 2015:

While oil prices have been falling across the country, the gap between California gas prices and the rest of the U.S. has climbed to higher levels for a longer stretch than at any time in the last 20 years.

 

[I'm surprised EIA did not include a fourth trend line: "US average price for gasoline in 47 states -- excluding Hawaii, Alaska, and California."]

The Institute (at Berkeley, California, cannot provide the answer, but it runs through the history and it's very interesting.

It's a good piece of analysis and a good column until the last few paragraphs when the writer got off topic.

But back to the analysis. I think the writer comes very close to the answer when he writes:

With prices very sensitive to even a slight shortage, and with two companies producing about half the state’s CARB gasoline supply, it seems quite possible that firms might be able to make more money by making less CARB gasoline.  This could be particularly true when a supply shock like a large refinery fire has already tightened the market.  

The problem with that argument is that there are no signs that any individual gas station or any chain has ever shown any outward sign of coming close to running out of gasoline on any given day or any given week. It's hard for me to believe that each and every gas station in California is cutting it so close to "empty" at the end of the day or the end of the week and that hasn't been noticed by investigators or researchers.

But maybe we will know more when the Torrance refinery is brought back on line, sometime in late 2016, I suppose (the refinery has been by Exxon to PBF Energy, a New Jersey company.