Senator Feinstein Urges In-Depth Look at Gasoline Prices in California
June 9, 1999

Washington, DC – Concerned about skyrocketing gasoline prices in California, U.S. Senator Dianne Feinstein (D-CA) has asked the General Accounting Office to conduct an intensive study of the California gasoline market and recommend solutions that can ensure more equitable gasoline prices.

“While I understand that the rise in demand for gasoline combined with OPEC’s recent decision to cut production has caused an increase in gasoline prices nationally, the dramatic price increase in California appears unjustified and far exceeds the increase in other states,” Senator Feinstein said. “Gas prices have risen an average of 14 cents nationally, but in California this increase has been more than 50 cents a gallon. That is a 350 percent difference.”

Senator Feinstein hopes to determine the causes of past and current price hikes and assess whether the hikes are attributable to market forces alone and whether Federal action can protect California drivers from unnecessary price disruptions.

In a letter to the GAO and in staff meetings with GAO officials, Senator Feinstein asked that the Comptroller General look at all market and non-market factors, including any regulatory restrictions on new refinery construction or the proximity of California to oil fields, which may be influencing the price at the pump.

Oil companies have maintained that several refinery fires in California coupled with OPEC’s decision to raise prices are responsible for the recent price hikes.

Since early March, the price of gasoline, after reaching a seven-year low, has increased by almost 50 percent in some parts of California. The price for a gallon of regular gasoline in California soared as high as $1.74, more than 60 cents above the national average.

California gasoline prices have stayed at the March level even though the short-term supply pressures have subsided. The California Energy Commission recently concluded that there is no shortage of gasoline in California and that production is currently at 96 percent of capacity.

Previously Senator Feinstein and her colleague, Senator Barbara Boxer (D-CA), have separately asked the Federal Trade Commission for an investigation of possible anti-trust activity that may be contributing to higher gas prices. Members of the California Congressional delegation have also asked the Justice Department to look into the problem.