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Are California Gasoline Prices Being Manipulated?

Market manipulation could be behind the fact that California drivers pay more for gasoline than the rest of the country, the Lost Angeles Times reports, citing a statement by the California Energy Commission.

“The Energy Commission has identified a number of possible causes that could explain the residual price increase in California, ranging from refinery outages to potentially market manipulation,” the statement, sent to Governor Gavin Newsom, said.

The commissions said it has identified several possible reasons for the fact that as of Friday, drivers in California paid an average of US$4.05 per gallon of gasoline, which was US$1.20 higher than the national average. Besides market manipulation, the reasons also included refinery outages.

The commission noted prices in California began climbing noticeably higher than the national average in 2015 following an outage at a refinery in Torrence, which continued for more than a year. According to one hypothesis, the price trend could be at least in part a residual result of this outage.

Another possible reason, according to the commission, is the “practice of higher-priced brand retailers of gasoline — Chevron, Shell, Exxon, Mobil, and 76 — to charge higher prices than unbranded, ARCO and hypermart retailers, for essentially the same product.”

“While this practice is not necessarily illegal, it may be an effort of a segment of the market to artificially inflate prices to the detriment of California consumers and could account for at least part of the price differential,” the regulator said.

Yet according to a Republican legislator the cause of the higher prices is the gas tax that Californians have to pay. “We know the most obvious cause of high gas prices and that’s the gas tax that was voted by Democrats two years ago, with more increases coming,” Marie Waldon said.

California currently has the second-highest gas tax in the United States, second only to Pennsylvania.

By Irina Slav for Oilprice.com

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