Explaining Southern California's economy

FAQ: Why are gas prices so high in Los Angeles? Everything you need to know

Gasoline Prices

Ed Joyce / KPCC

Southern California gasoline prices skyrocketed Friday to $4.53 a gallon, nearing the all-time record price set in 2008. And there's no relief in sight.

In one short week, the price of a gallon of regular gasoline has shot through the roof, climbing nearly 50 cents. The price in Los Angeles County is currently at $4.59 on average, with prices in some parts of the city closing in on ... wait for it ...

Six bucks!

What's behind the big spike, which has now placed us within spitting distance of our all-time 2008 high of $4.61. 

Why? Why?!

Glad you asked...

Q: Does this have anything to do with the fire at Chevron's Richmond refinery from back in August?

A: YES! The oldest refinery in the state still isn't fully back online. It accounts for around 15 percent of all the gas that goes into motorists' tanks in the Golden State. And this isn't just any gas — it's a special formula, more environmentally benign, that is required by state law. Burning that fuel already costs Californians more than states where bad, old environmentally less clean gas is consumed. So any disruption in the supply is going to push our gas prices up — fast!

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Wait! The U.S. could be the worlds largest energy producer by 2020?

Keith Srakocic/AP

A rig in Washington, Pa., drills into shale rock to extract natural gas.

Indeed it could. This is from Bloomberg:

Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal. Methanex Corp., the world’s biggest methanol maker, said it will dismantle a factory in Chile and reassemble it in Louisiana to take advantage of low natural gas prices. And higher mileage standards and federally mandated ethanol use, along with slow economic growth, have curbed demand.

[...]

The transformation, which could see the country become the world’s top energy producer by 2020, has implications for the economy and national security -- boosting household incomes, jobs and government revenue; cutting the trade deficit; enhancing manufacturers’ competitiveness; and allowing greater flexibility in dealing with unrest in the Middle East.

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Paul Krugman gets Solyndra slightly wrong

Mercer 20725

Solyndra

A Solyndra solar rooftoop installation.

In a great column titled "Here Comes the Sun," the New York Times' Paul Krugman argues that we are on the brink of a solar transformation of our energy economy. Maybe he's right. During the course of proving his point, however, he has this to say about the controversial solar startup Solyndra, which recently went bankrupt and whose funding has brought the Obama Administration under fire:

These days, mention solar power and you’ll probably hear cries of “Solyndra!” Republicans have tried to make the failed solar panel company both a symbol of government waste — although claims of a major scandal are nonsense — and a stick with which to beat renewable energy.

But Solyndra’s failure was actually caused by technological success: the price of solar panels is dropping fast, and Solyndra couldn’t keep up with the competition. In fact, progress in solar panels has been so dramatic and sustained that, as a blog post at Scientific American put it, “there’s now frequent talk of a ‘Moore’s law’ in solar energy,” with prices adjusted for inflation falling around 7 percent a year.

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