GAO Report Requested by Senator Feinstein Says California Third Largest Gasoline Consumer in World
May 9, 2000

Washington, DC – In a report requested by U.S. Senator Dianne Feinstein (D-Calif.) late last year following rapid price increases in California gasoline, the General Accounting Office (GAO) found that the state is the world’s third largest gas consumer and is subject to larger price spikes than rest of nation because of strict supply-demand nature of gasoline.

The report asserts that gas prices spike up higher, but no more frequently, in California due to unplanned refinery outages that upset the supply-demand relationship in the state. Because California refineries produce at almost full capacity, supply disruptions caused by refinery outages must be made up from other sources, such as out-of-state providers.

“I was startled to learn that California is the third largest gasoline user in the world, consuming more gas than every other nation on earth except for Japan and the United States,” Senator Feinstein said. “This clearly demonstrates to me the great need for increased use of alternative fuels and vehicles, and improved and expanded public transportation in California and the rest of the nation.

“One serious concern that comes through in this report is that because of the nature of California gasoline and our limited number of refineries function at capacity year round. Therefore any refinery accident or fire which causes a shutdown immediately impacts the availability and price of gasoline in our state. When our state’s population grows to 50 million people over the next 20 years, this shortage of refining capacity will seriously affect California.

“Because of the unlikelihood of additional refineries, the need for alternatives to the internal combustion and increased fuel efficiency become critical. I believe very strongly that all sport utility vehicles (SUVs) should be just as fuel efficient as cars, and if they did we could save one million barrels of oil a day.”

The report also says that retail prices were eleven cents higher on average in San Francisco than in Los Angeles from January 1992 to December 1999 because of local supply and demand conditions.

California consumed almost 1 million barrels of gasoline per day in 1999, more than any other state in the nation. Furthermore, from 1996 through 1999, California’s gasoline demand grew at an annual rate of about 1.4 percent. In 1997, California was the third largest consumer of gasoline in the world, behind only the United States and Japan and ahead of such major countries as China, Germany and Russia.