There are at least four factors contributing to gasoline price increases. First, world crude oil prices have contributed to a nationwide 10-12 cent increase per gallon for gasoline and diesel. Second, many producers have drawn down their oil reserves speculating on the availability of lower cost crude oil if Iraq is once again allowed to sell in the world oil market. As a result, many refineries are short of crude oil supplies. Third, refinery fires in the ARCO diesel production unit and the Shell gasoline production units have constrained the availability of refined diesel and gasoline in California. Fourth, beginning March 1, 1996, the California Air Resources Board (CARB) required that all gasoline produced in California be reformulated to reduce air emissions. Of these factors, the CARB requirements are the least significant. Even if the CARB requirements did not exist, U.S. Environmental Protection Agency rules would also require gasoline reformation.
By triggering the Verification Phase, the Commission has immediately initiated formal communication with the Office of Emergency Services, the U.S. Department of Energy, other Petroleum Administration for Defense District V states, state and local government agencies, and private industry, as appropriate. During the Verification Phase, the Commission will continuously assess the impacts of petroleum supply and demand. Based on this intense level of information collection and analysis, the Chairman will provide a formal Verification Report to the Governor. If the Chairman determines the existence of a protracted energy problem, he may recommend transition to the Pre-Emergency or Emergency Phase of the state's Energy Emergency Response Plan.
The Pre-Emergency Phase involves an increased level of government activity as the energy shortage or supply disruption worsens.
The Emergency Phase involves all activities initiated during the Pre-Emergency Phase, plus any additional voluntary or mandatory programs which may be needed to respond to a worsening energy shortage. To impose mandatory programs requires a Gubernatorial declaration.
On April 16, ARCO announced that it would increase its prices to wholesale and retail customers by 9.25 cents per gallon. This increase, which has the potential of creating a ripple effect throughout the gasoline market, in addition to the increases since the beginning of the year triggered Imbrecht's decision.
Imbrecht stressed, "We are taking this action as a precautionary measure to insure that we have the latest price and supply information. We are not yet facing an energy emergency, but as a consequence of a variety of independent factors, our ordinary supply and demand balance has been jeopardized resulting in price increases which impact California's economy."
Imbrecht urged Californians' not to over react but to report any supply shortages or disruptions to the Energy Commission at 1-800-822-6228.
Pursuant to state regulation and adopted Executive Orders, the Chairman of the Energy Commission coordinates and directs the response to energy related disruptions whether they are caused by economic conditions or natural disasters.
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