What's driving Valley's gas prices higher?

By Bethany Clough | August 22, 2009
Merced Sun-Star

Everyone knows gas is more expensive in California than elsewhere in the country -- but lately, drivers here are paying even more.

In the Valley, drivers pay 44 cents per gallon more than the national average.

Why so much? Taxes, the state's cleaner-burning blend of gasoline, and a lack of fuel storage and sources that have turned California into a "fuel island," according to a new report.

And recent problems at several of the state's refineries have further squeezed the supply, according to the California Energy Commission.

Nationally, the average price of a gallon of gasoline was $2.62 Thursday. In Merced, it was nearly $3.09.

California drivers generally pay about 30 cents more per gallon for their gas, but lately are paying more than 40 cents more.

A new nonprofit group called Fueling California has taken a fresh look at well-known underlying factors. The group speaks on behalf of businesses such as UPS, United Airlines and Harris Ranch that use a lot of fuel.

"It's especially important right now that we think about the economic impact of everything that we do," said Wallace Walrod, who coordinated research for the report. "Higher gas prices have an effect on economic growth."

Walrod is vice president of research at the Orange County Business Council, which collaborated with professors and economists from California State University and the University of California to produce the report.

The report pulls from existing studies — many by the California Energy Commission.
One factor is taxes.

State gas taxes are 18 cents a gallon, second highest — after New York state — in the nation, according to Fueling California.