California's Gas Prices Begin To Stabilize

Motorists should be seeing some relief from the recent record spike in gas prices. The average price for a gallon of regular unleaded hit $4.67, according to AAA. That price hike sent elected officials scrambling. Some are calling for a federal investigation, while others are taking emergency steps to increase supply.

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STEVE INSKEEP, HOST:

Let's go next to California, where motorists should be seeing some relief from the recent record spike in gas prices. That price hike - about 50 cents per gallon in one week - sent elected officials scrambling. Some are calling for a federal investigation and others are taking emergency steps to increase supply.

NPR's Richard Gonzales reports.

RICHARD GONZALES, BYLINE: The gas station at the corner of 17th Street and Portrero Avenue in San Francisco offers a gallon of regular for $4.79, and that's got Anthony Cuvson frustrated as he fills his little Honda.

ANTHONY CUVSON: It rose too fast. Like two days, I mean it was at what? Three - maybe three something and then two days it goes to like almost $5 for gas? That's too much for $5 and I got a little car.

GONZALES: Prices jumped at the beginning of the month when a major refinery was struck by a power outage. Supplies were already spotty due to a fire at a Chevron refinery in Richmond California in early August. Then there was a disruption of a Chevron pipeline from Kern County to the Bay Area.

Patrick Dehaan is a senior petroleum analyst at GasBuddy.com.

PATRICK DEHAAN: The root of the problem is refineries that seemingly continue to be bogged down by problems. That's the problem here, is that refineries are not reliable. It certainly doesn't help with the aging infrastructure that we have.

GONZALES: Compounding California's problem is the fact that state law requires refineries to make a specific blend of environmentally friendly gasoline. Neighboring states don't make the same blend so that rules out trading gas with other states.

Over the weekend, California Governor Jerry Brown gave refineries permission to produce and sell a winter-blend gasoline three weeks earlier than scheduled. The winter blend is not as easy on the environment, but it should help bring down the price says, UC Berkeley energy economist Severin Borenstein.

SEVERIN BORENSTEIN: His announcement said that this would increase supply by eight to 10 percent, and if that's true that will completely end the price spike, that's a huge amount of gasoline. It's unclear how quickly that eight to 10 percent comes to market, however.

GONZALES: Both California Senators Dianne Feinstein and Barbara Boxer are asking for federal investigations into possible market manipulation. Severin Borenstein says the likelihood that refiners are colluding is extremely unlikely.

BORENSTEIN: That would be a criminal violation of the anti-trust laws, and I think the managers of these refineries are very aware of that and don't want to go to jail.

GONZALES: A spokesman for the Western States Petroleum Association says his group would cooperate with any investigation.

Richard Gonzales, NPR News, San Francisco.

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