After Arizona drivers paid hundreds of millions of dollars more than their neighbors for gasoline earlier this year, state lawmakers are considering whether to seek a change to the state’s unique fuel requirements to protect consumers.
The Phoenix was hit by a monthslong price spike that began in March, sending prices up by $1 a gallon.
For weeks, prices in Phoenix topped $5 per gallon and were even higher than the average gas price in Los Angeles, which tends to be among the most expensive markets in the country.
The spike didn’t affect parts of Arizona outside metro Phoenix that don’t require the same unique fuel blend that is intended to mitigate air pollution, because those areas were still able to get ample supplies of the fuel they use.
The Phoenix area was hit because two of the refineries that produce Arizona’s unique “cleaner burning gasoline,” or CBG, were out of service, and the other refineries that produce CBG could not get ample fuel to Arizona to make up the shortfall.
Arizona gas prices:Price per gallon drops 18 cents, 7th highest average in the US
On Monday, lawmakers will meet to discuss whether the state might rewrite its fuel requirements to allow a more readily available blend of gasoline to be sold in the Phoenix area, preventing similar spikes when key suppliers close their refineries for maintenance.
“I am gratified that, at least at this juncture, lowering gas prices for Arizonans and increasing our state’s energy security appears to be a common-sense, consensus item,” state Rep. Alexander Kolodin, R-Scottsdale, said Thursday.
He said he has not heard opposition to the proposal either from state officials or fuel producers.
The Joint Legislative Ad Hoc Committee on Air Quality and Energy, which includes lawmakers from the state House and Senate, will meet at 3 p.m. Monday to discuss the matter. Kolodin and other lawmakers wrote to the committee in September asking members to address the issue.
The meeting will be live-streamed.
Oil companies warned state about supply problem
Oil companies saw the spring problem coming. They warned the state in early March that weeks-long refinery shutdowns in New Mexico and Texas in March and April would cut off more than 50% of the supply of CBG to the Phoenix area.
When those refineries shut down, the average price of a gallon of regular gas in the Phoenix area shot up from about $4 a gallon in March to $5 by late April.
Arizonans were the only motorists hit with the shocking prices, which lasted several weeks. The average gas price in Los Angeles, Las Vegas, Denver, Salt Lake City and Albuquerque, N.M., continued to track the national average, while Phoenix’s price shot skyward. They began a slow fall back toward the national average in June.
Generally, the Phoenix area gets its gasoline supplies from two major pipelines, one to the west bringing fuel from the Los Angeles area and the other from the east, bringing fuel from New Mexico and Texas.
'Value of solar':Corporation Commission reopens rate discussions despite strong opposition
When the refineries to the east were shut down, there wasn't enough space in the other pipeline to meet the region's demand, according to a March 8 letter HF Sinclair, which runs one of the CBG-producing refineries undergoing maintenance, wrote to Gov. Katie Hobbs.
Fuel also can be delivered by truck, but that is both expensive and counterproductive to mitigating air pollution.
Maricopa County drivers buy about 4.5 million to 5 million gallons of gasoline a day.
That means when the price spikes $1 a gallon, people in Phoenix spend about $4.5 million to $5 million more per day on fuel.
That puts the toll of the spring fuel crunch on Arizona’s economy into the hundreds of millions of dollars.
Kolodin took lead on issue
Lawmakers were incensed that the state was being hammered by gas prices along with record inflation on other consumer goods that disproportionately hit Arizona.
Kolodin in June asked the Arizona Department of Weights and Measures to provide lawmakers a list of all the facilities nationwide that are capable of producing the unique fuel blend used in the Phoenix area.
“With the recent shortages and price spikes, I am concerned that our boutique blend of fuel, and the potentially few refineries that manufacture it, may be exposing our state to unnecessary price spikes and shortages, which harm our state's economic competitiveness and increase the financial stresses on our most vulnerable,” Kolodin wrote.
Summer energy comsumption:APS power use set new records. Here's how much power customers used
He requested the information be provided under seal. Oil companies, for competitive reasons, are notoriously secretive about the operations of their refineries.
A specific state law even shields government documents with information on oil supplies from public disclosure, meaning drivers have little knowledge of where their fuel comes from in Arizona.
Why does Phoenix use a unique fuel blend?
The EPA requires reformulated gasoline in places with high air pollution such as Phoenix under authority of the Clean Air Act.
But instead of reformulated gas, the Arizona Legislature in 1997 approved a program to burn CBG to more specifically target pollution. There are different requirements for fuel in summer and winter to mitigate the air pollution most common in each season.
Lawmakers saw potential supply problems coming years ago. Sen. Frank Pratt, R-Casa Grande, sponsored Senate Bill 1477 in 2020, which would have made the state request approval from the EPA to use a more readily available fuel blend in the state.
A state official testified at the time that newly developed fuel blends could be used in place of CBG without worsening air pollution.
Pratt's bill had broad, bipartisan support in the Senate before the legislative session was interrupted that year by the COVID-19 pandemic.
Pratt died the next year, and nobody has taken another shot at fixing the issue, until now.
Michelle Wilson, an associate director at the Department of Weights and Measures, explained Pratt’s bill to lawmakers in the Senate Natural Resources and Energy Committee in 2020.
At the time, she framed the bill as a common-sense solution to prevent potential fuel shortages, even though state agencies did not take a position on the bill. She said new fuel blends could be used and the city's air pollution would not increase.
“Since the late 1990s, the federal standards for gasoline have improved drastically, begging the question of whether the boutique CBG fuel formulations were still necessary,” she said.
She said switching would benefit the state because other fuel was more readily available than CBG.
"The difference is, our current fuel, Cleaner Burning Gasoline during the summer, is only sold in Arizona," she said. "So when there is tightness in the market, you cannot go anywhere and get this fuel.”
Wilson, whose title is now listed as regulatory compliance administrator, is scheduled to speak to lawmakers at Monday’s committee hearing.
Also scheduled to speak is Gordon Schremp, who has fuel experience working with the California Energy Commission and will present an overview of the state fuel supply.
Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on X, formerly Twitter @UtilityReporter.
Subscribe to azcentral.com today.
from "price" - Google News https://ift.tt/pqD3nvh
via IFTTT
No comments:
Post a Comment