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Many of the same factors that led to the electricity crisis exist in the gasoline market as well:  

• Gasoline demand will soon exceed supply in California.
  
• California refineries, which are operating at full capacity, are controlled by a small handful of companies, leaving the market ripe for gaming.  
  
• California must phase MTBE out of gasoline, and replace it with ethanol,  which may cause a six to ten percent shortfall in gasoline supply by the end of next year. 
  
• Ethanol is produced by a limited number of companies, most of which are located out-of-state, and is difficult to transport and store.
  
• By the end of next year, California is likely to face supply disruptions, distribution problems and painful price increases that will lead to calls for weaker public health protections and new refinery construction. 
  
• Even without the phase-out of MTBE, gasoline demand will surpass supply in the coming years.
  
• Like the electricity crisis, reducing demand is the only real solution.

California can help avert a gasoline crisis by taking steps now to reduce gasoline consumption.  By increasing fuel economy and decreasing the amount that Californians need to drive, the State can help prevent a second energy crisis, save consumers money and put Californians on the road toward sustainable transportation.
 
California's Demand is Fast Outstripping Supply.
 
Gasoline demand has been increasing steadily for the past few decades as Californians drive less and less efficient vehicles over more and more miles.  As Californians rush to buy gas-guzzling sport utility vehicles (SUVs) and other light trucks, the average fuel economy of vehicles on the road has been dropping.  The fuel economy of the average new vehicle sold in the United States has been falling since 1987 and is now at its lowest point in twenty years. 

Adding to the problem, the average amount that Californians drive has been increasing steadily, actually outpacing the rate of population growth.  Sprawling development has only increased our reliance on automobiles and made it more difficult for Californians to use transportation alternatives such as mass transit, bicycling and walking.  If we continue to increase the amount we drive, and to drive gas-guzzling vehicles, gasoline use will increase 43 percent by 2020.

California's Gasoline Market will be Ripe for Gaming.

The price that Californians pay for driving is only going to go up, and fast.  With refinery control limited to fewer and fewer companies and capacity reaching its limits, the situation is remarkably parallel to the electricity crisis and, like the electricity crisis, will be ripe for market manipulation. 

Next year, California plans to phase MTBE out of gasoline because of the extensive groundwater contamination MTBE has caused.  The replacement of MTBE with ethanol is likely to cause higher and more volatile prices at the pump.  In addition, most ethanol supplies are produced by out-of-state companies that have limited production and means of distribution to the California market.  Regardless of what happens with MTBE and ethanol, demand will still exceed supply in the coming years.  The MTBE phase-out just makes the crisis more imminent.

Gasoline Consumption Harms Public Health, the Economy and Quality of Life.

Our driving patterns and vehicle preferences have critical implications for public health and the environment.  More than 90 percent of California's population lives in areas where the air doesn't meet government health standards. 

Transportation causes more than half of the State's smog-forming pollution and global warming emissions.  Gasoline also contaminates the State's drinking water and threatens its coastline with offshore oil spills.  Sprawling development and the growing network of roads, highways and parking lots that go with it are gobbling up open space, farmland and entire ecosystems in California.

Increased driving in California also affects the State's economy and quality of life.  Californians spend more money on transportation, mostly the purchase and fueling of our automobiles, than any other expense except housing.  And drivers lose precious hours and money in ever-increasing congestion, which is no longer limited to major metropolitan areas, but affects nearly all regions of the State.  Three of the ten most congested areas in the country are located in California.

In response to growing demand and shrinking supply, refineries will probably try to weaken environmental and public health protections in order to build more refineries and expand capacity, just as the electricity generators have done.  But California cannot build its way out of this crisis, nor should it try.  More refineries and more automobiles just mean more pollution, more global warming emissions, more roads and more traffic.

The Only Real Solution is to Reduce Demand.

The electricity crisis has demonstrated that the only short-term solution is to cut demand. The most dire predictions for blackouts and sky-high prices this summer have not materialized because the State has successfully cut electricity demand by more than 10 percent, through a combination of energy-efficiency improvements and plain old conservation.  California can do the same things with gasoline - increase the fuel efficiency of motor vehicles and reduce the amount that they drive by providing more and better transportation choices.

Californians can increase the fuel-efficiency of cars they already own by ten percent or more simply by putting more fuel-efficient tires on their cars, keeping tires properly inflated, servicing their cars as needed, and changing driving habits.  The State should also adopt a combination of incentives and regulations to increase the fuel efficiency of new cars, especially the biggest gas-guzzlers such as SUVs, minivans and pickup trucks.  If today's SUVs, minivans and light pickup trucks met the same fuel economy standards as cars, Californians would save an additional $2.4 billion at the pump and 1.5 billion gallons of gasoline in a single year.

Increasing fuel-efficiency is not enough, though.  As our population continues to grow, we need to develop and expand transportation alternatives, such as public transportation, bike paths and pedestrian routes.  And we need to adopt transportation and land use planning policies that lead to more compact, livable communities with better transportation choices and less congestion.

California's rising gasoline demand has led the state to a cross?roads.  One direction, the course of unchecked demand, will lead us to a crisis, with public health and the economy taking a back seat to our consumptive habits.  The other path will lead the State towards a more efficient and healthier future, with reduced congestion, smarter growth, and a wider array of transportation choices for Californians. By reducing gasoline consumption, Californians will protect the State's economy, improve public health and enhance their quality of life.