California unlikely to get much help from Biden to lower gasoline prices. Here’s why

Reality Check is a Bee series holding officials and organizations accountable and shining a light on their decisions. Have a tip? Email realitycheck@sacbee.com.

The Biden administration boasted this week that it’s taking strong steps aimed at “helping to lower prices at the pump as Americans hit the road this summer.”

But its action is unlikely to help bring down California gasoline prices, which have consistently been the highest in the nation.

“It doesn’t mean anything for California,” said Patrick De Haan, head of petroleum analysis at GasBuddy, nor is it likely to mean much for consumers buying gasoline in all but six northeastern states.

A gallon of regular gasoline in California Wednesday cost $5.17. In the Northeast, which the administration hopes will benefit from its action, prices ranged from $3.77 a gallon in Pennsylvania to $3.50 in New Hampshire.

California’s average is by far the country’s highest, 37.5 cents a gallon more than runnerup Hawaii.

Pennsylvania and New Hampshire are swing states in the upcoming presidential election. Sanjay Varshney, professor of finance at Sacramento State, thought politics played a big part in the administration’s decision.

“The president is doing this to show some goodwill in those states. California is a guaranteed Democratic state,” said Sanjay Varshney, professor of finance at California State University, Sacramento.

The U.S. Energy Department plans to release 1 million barrels of oil of gasoline from the Northeast Gasoline Supply Reserve in time for the July 4 holiday. The Reserve is a federal emergency supply of gasoline stored in the New York harbor area and Maine that can be tapped when needed.

The decision comes because “The Biden-Harris Administration is laser focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season,” said Energy Secretary Jennifer Granholm in a statement.

Asked about California’s prospects for relief, the Energy Department sent The Bee this statement: “The barrels of gasoline to be sold are in the Northeast and will likely impact that area more directly given the regional nature of fuel distribution but, any additional gasoline supply brought into should have an impact on all drivers.”

No relief for California

What about California?

Andres Correa, a White House spokesman, told The Bee the latest action “builds on other actions by the President to lower gas and energy costs—including historic releases from the Strategic Petroleum Reserve and the largest-ever investment in clean energy.”

He said, “We’ll continue to closely monitor prices and take action where we can to lower prices at the pump for families.”

The Strategic Petroleum Reserve is located along the Texas and Louisiana Gulf Coast. Created during the oil supply crises of the 1970s, it has the world’s largest emergency oil supply. De Haan said that it has little impact on California supply or prices.

“It would be a nightmare getting it (oil) to California, but even then it still has to be refined, so releasing more oil doesn’t necessarily help when the California kink is (its) refineries, De Haan said.

Chances are even if somehow 1 million more barrels of oil from the northeastern reserve could reach California, it would make little difference.

“There will not be any significant difference in California which burns through on a daily basis multiple times of the amount announced by the Biden administration. It may have a ‘news effect’ that the administration is doing everything to help bring prices down,” said Gokce Soydemir, Foster Farms endowed professor of business economics at California State University, Stanislaus.

California’s prices are high for several unique reasons, notably the status of its refineries.

“Refineries in the state often operate at or near maximum capacity because of the high demand for those petroleum products and the lack of interstate pipelines that can deliver those cleaner fuels into the state,” an analysis from the federal Energy Information Administration said.

If a refinery has to shut down, the EIA explained that a lack of supply from interstate pipelines “means replacement supplies of (California gasoline) come in by marine tanker from out-of-state U.S. refineries or from other countries. It can take several weeks to find and bring replacement motor gasoline from overseas that meets California’s unique specifications.”

Other factors driving prices in the state are its gasoline taxes, which are among the nation’s highest, and the need to conform with the state’s tough environmental standards. The summer blend of gasoline, designed to meet those standards, is more costly to produce.

Prices in California are expected to go up somewhat this summer, as demand increases and the geopolitical situation remains volatile.

“Regional conflicts in the Middle East and Ukraine are what are keeping gas prices high at the pump,” said Soydemir.