Nov 21, 2022 - News

Utah's gas price report takes aim at California

Illustration of a gas pump nozzle separating color blocks of green and yellow, with elements of ballots behind it.

Illustration: Brendan Lynch/Axios

A new state report says "government interference in the free market" has driven up Utah's gas prices by pushing western oil refineries to close, reducing supply.

  • Gas prices in Utah remain far above the national average.
  • But a closer look at recent refinery shutdowns casts doubt on the report's conclusion that climate-focused "regulation" is mostly to blame.

Driving the news: In the report, commissioned by Gov. Spencer Cox, the state Office of Energy Development found that "West Coast demand" for Utah's gas was pushing up prices.

  • While refinery capacity in Utah has grown by 24% in the past decade, it has decreased overall in western states.

What they're saying: "We now understand why gas prices in Utah are high and can work toward increasing supply and reducing prices," Cox tweeted.

  • It's unclear how Utah could increase its supply with refineries already at capacity and crude production higher than any year on record.

Details: The report blames federal and state "decarbonization" policies for the oil refining slowdown, citing "national rhetoric and government involvement around decreasing the use of fossil fuels."

  • Federal incentives have led refineries to convert from gasoline to biofuel products, the report states, and a federal analysis this summer confirmed that those switches are contributing to high gas prices in the west.
  • It also highlights California's aggressive environmental rules, arguing they have prompted refineries there to slow down, hampering supply and driving up prices in the region.
  • It's unclear how much gas Utah exports to California; the only two pipelines from our refineries end in Nevada and Washington — and California's fuel rules limit its imports from other states.

Yes, but: Much of the west's reduced refining capacity has occurred outside of California, and the refineries themselves gave reasons unrelated to government interference.

  • By combined volume, Alaska and Hawaii account for even more of the west's refining capacity loss in the past decade than California does.

Reality check: Eastern states aren't exempt from federal regulations, but they still enjoy lower prices.

  • The east has far more pipelines that connect to cheap fuel from the Gulf Coast — a supply western states can't tap into.

Between the lines: The report doesn't acknowledge the threat of climate change and says only "some" refinery regulations are justified to limit Utah's air pollution.

  • With its focus on regulatory complaints rather than geographic factors and pandemic-related demand fluctuations, the report is something of a gift to the oil and gas industry.

What's next: Oil companies are eyeing two potential pipeline routes to bring more gasoline into the Mountain West, the report states.

  • The authors also recommend more efficient public transit options and state messaging to lower Utahns' fuel consumption, which has grown faster than the population has.

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