California -Gas Prices & More
I live in California and I recognize that complaining about
anything out here will probably fall on deaf ears. Folks in the rest of the
country tend to think Californians are all fruits and nuts or the weather is so
good we should shut up and take whatever is thrown at us. To some degree I
understand that perspective but I want to opine on California, its gas prices and
more as it might give some insight into what the rest of the nation may face
soon.
As all of you have seen California gas prices have spiked
enormously in the last two weeks. The excuse is that we had two big refineries
go off line and thus supply was cut causing prices to jump. In many metro areas
we are seeing prices between $5 and $6 a gallon. The highest recorded last week
was $6.65 a gallon. This is serious inflation and is hitting our businesses and
citizens hard. The average is supposedly $4.67 but you would be hard pressed to
find that in most areas. Compare this to national average at $3.81 and you get
the picture.
We all know the trickle-down effect this type of gas price
has on the local economy so I won’t spend much time on that but suffice it to
say this is a huge hit and it is hurting a lot of folks on the West coast.
In California we are so “green” conscious that we do not
allow normal gas refined outside our state to be sold within our state. In
short CA thinks that normal gas produced elsewhere that meets federal EPA standards
is not good enough. So in the 1990’s we passed a law defining the makeup of
California gas. We have two blends of gas we allow – summer and winter blends.
The summer blends are much less polluting as we drive more in the summer than
winter. The winter blend is our low level fuel but it is still above national EPA
standards.
The state has regularly been ranked 3rd or 4th in oil
production in recent years. (however, that was before we had 2 of our 14 refineries
go down for “maintenance”) In spite of having the third largest oil and gas
reserves of any state in the nation, California is ranked dead last among all US
jurisdictions for global oil investment. The fact that California hasn’t
issued a new offshore drilling permit for over 30 years is
undoubtedly a factor, as is the fact that the Monterey Shale Oil Field, which
holds 64% of all the recoverable shale oil in the United States, is
hamstrung by lawsuits, a typical condition in the state for both drilling and
refining operations. In spite of the state’s natural bounty, California
produces only 37% of its statewide oil consumption. The rest comes from other
states and countries, at added expense for both transportation and our special
blends.
Due to this crisis, our governor Brown (Moon Beam) decided
that he would save the state by allowing the winter blend to be sold a few
weeks prior to when it is normally released. The Green gods are angry and I am
guessing if you don’t hear from me in the next two weeks it will be because all
30+ million Californians will have died from this extra two weeks pollution! In
reality what this means is nothing! The winter blend should be a few cents
cheaper but it will not close the gap on the national average price. Actually
with the big refinery back on line and the winter blend released analyst say
the price will maybe go down by 10 to 15 cents per gallon. At least that is
what they said last week – I have not seen that at the pump yet. Maybe it will
only be in Sacramento for Governor Moon Beam and legislature? A real solution
would be to allow us to buy gas from neighboring refineries in Arizona and
Nevada but that is outlawed because of our specific blend requirements.
California is $16 billion dollars upside down and in
tremendous fiscal trouble. We have over 37.6 million people (over 12% of the US
population), a huge immigration problem, very powerful unions, some of the highest
taxes in the country, liberal voters and a business hostile environment. Sure
the geography and weather are great but there has to be limits to what it costs
for those two things. We have lost over 855,000 jobs since the recession began
and our state unemployment rate is just under 11% (over 15% where I live).
Now facing this $16 billion deficit, Governor Brown
said he plans to raise the state sales tax (already the highest in the United
States) from 7.25 percent to 7.5 percent and, of course, he's looking beyond
that, too. California's combined federal, state, and local gasoline tax is
among the highest in the United States at 67 cents per gallon. Only Connecticut
(71 cents per gallon) and New York (67.4 cents per gallon) are higher. Please
note that New York and Connecticut’s average gas price is at $4.06 not near
what we are paying in California.
Here are a few more statistics about California that
you should be aware of because we are the largest state (population wise
anyway) and we are often a model for others. Aside from our really high fuel
prices we also have other major problems like taxes, business over regulation,
illegal alien population, tuition hikes, high utility costs, housing problems,
and much more. Here is just how screwed up we really are:
The Tax Foundation looks at five forms of taxation –
corporate tax, individual income tax, sales tax, property tax, and unemployment
insurance tax – to index the business climates of the 50 states. By this
combined measure, the Tax Foundation ranks California 48th in business climate.
(New York is 49th, and New Jersey 50th.) California ranks 7th highest in
electric utility costs, with Hawaii being the highest, followed by Connecticut
and Alaska. California has by far the largest debt of any US state, at around
$612 billion with state and local debt and pension liabilities included. In
terms of raw numbers, New York posts a pathetic second place with only $305
billion.
The California debt spiral is due in part to the steep
decline in state tax revenues. The 22% year-on-year decline observed in
February 2012 doesn’t tell the whole story either; California had already posted
dramatic revenue losses in business and property taxes between 2007 and 2010.
Business-tax revenues dropped 18% in that period, and property-tax revenues
fell 30% due to the real estate market crash.
California also has the distinction of having 12% of the US
population and 33% of the nation’s welfare recipients. Governor Jerry’s
Brown’s 2012-13 budget proposal includes $100 billion for health and human
services, which, on an annualized basis, is more than all the state and local spending in
27 of the 50 states.
How many businesses are leaving California? In 2011, 254
businesses left California, or an average of 5 per week. 202 left in 2010, 51
in 2009. Even “green” businesses are leaving California. The business
environment is that overregulated, and costs are that high. A business saves,
on average, between 20% and 40% on costs by moving out of California. But
according to a 2011 report, 2500 employers ceased operations in California
between 2007 and 2011. The great majority of them simply went out of business. How
did California’s real GDP growth rank in 2011? 34th in the United States.
California had the highest average mortgage debt per
household at $313,000. California has had the second highest foreclosure rate
of any state throughout the recession (Nevada has the highest). In terms of the
state’s percentage of underwater mortgages, California ranks only 6th (Nevada,
again, is #1). But that’s a little deceiving, since the value of the underwater
mortgages in California is over $544 billion. That sum represents nearly 30% of
total mortgage debt in California, which is $1.94 trillion – or
22% of all mortgage debt in the United States.
California had the highest tuition hike for its state
university system in 2011 with a jump of 21%. (This hike mitigated
somewhat the advantage of in-state tuition for those here illegally, which
California offers along with 11 other states.) I can attest this with two kids
still in California colleges.
So while we might have some good weather and great
geography the price we are paying for it is growing and has many Californians
questioning whether it is worth it? As we watch the continued march of the country
to socialism, I think it would behoove everyone to take a look at California
(and New York) our most populous state and where all this liberal thinking and
policy making has gotten us. Beware that your state could be next.
So when it is all said and done it is not just about gas prices in
California but the entire state and its regulatory environment. It is about 2.5
million illegal aliens using our California services, it is about a legislature
that has been Democratically controlled for over 12 years and the same two US
senators since 1992; it is about housing and tuition costs and taxes; and it is
about doing what is best for America and future of our children.