Governor's Order on Gas Intended to Cut Prices at the Pump

Governor Jerry Brown today ordered California smog regulators to allow winter-blend gasoline to be sold in California this month, a move intended to reverse a sudden scare in the wholesale gasoline market that saw prices shoot up nearly 50 cents a gallon in six days.

The governor ordered the California Air Resources Board to allow
refiners and gas stations to roll out the winter blend before its previously-
scheduled Oct. 31 sales date, an action the governor said will increase gas
supplies up to 8-10 percent, "with only negligible air quality impacts.''

In a letter released at noon, as California gas prices fluctuated widely
for the seventh straight day, the governor said the market variations were
imposing "unacceptable cost impacts on consumers and small businesses.''

This, he said, was threatening "significant economic disruption, and serious harm to public safety and welfare.''

An analyst said California's wholesale gasoline market has gone "into a
panic about the adequacy of California fuel supplies'' Jeffrey Spring of the
Automobile Club of Southern California said the market disruption followed a
power failure at the ExxonMobil Torrance Refinery and closure of a Chevron
pipeline that moves crude oil to Northern California last Monday.

Other pressure on the state's gas market includes local refineries dropping production levels, energy companies exporting fuel to Mexico and other countries, and allowing inventory to dwindle in anticipation of switching over
to production of winter blend gasoline, Spring said.

The average price of a gallon of self-serve regular gasoline in Los Angeles County rose to a record $4.661 Saturday, increasing 12.2 cents from Friday. In Orange County, it settled at one penny lower than LA. 

"I am directing the Air Resources Board immediately to take whatever steps are necessary to allow for an early  transition to winter-blend gasoline'' to be sold in California, the governor said in a letter to Mary Nichols, his appointed head of the CARB.

Some clean air advocates had worried that such a move would hurt air quality in October, which is one of the hottest months in coastal California due to Santa Ana windstorms and other seasonal weather fluctuations.

The governor said today that winter gas evaporates more quickly than summer blend, which takes longer to evaporate and is better during the smoggiest months of the year in the summer.

Brown said he expected gas prices to settle down, now that the ExxonMobil refinery in Torrance has resumed operations following an electricity outage last week.

A Tesoro refinery in the South Bay is expected to resume production next week, after its maintenance shutdown.