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Former Shell Oil CEO John Hofmeister on the factors driving up the price of gas in California.
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At the pump for California drivers gas prices hitting new record highs this week gallon of regular unleaded now at 449 a gallon.
That compares to nationwide average you can see there -- 379 now.
One of the many reasons for this a Southern California refinery suffering a massive power outage and now.
It's back up and running.
But don't expect prices to come down anytime soon there's now talk of the gas shortage here with more John -- Meister former CEO of shell oil company.
And founder of citizens for affordable energy John welcome back to the show.
He had to tell you this feels like the 1970s all over again shortages.
Line to your local station.
What's go on how do you explain it.
Well first of all let's remember.
Californians love cars.
There are more cars more people driving cars more interstate highway miles more freeways in California than anywhere else in the nation.
And there's no alternative so they have to be in their cars to get where they need to go secondly.
Some of the oldest infrastructure.
To support that car crazy state.
Exist up and down the coast of California.
That would probably about faster but didn't just talk for just a second here what is the infrastructure so old I mean everything -- the oil industry is.
-- -- -- pretty lucrative after all why don't think build any new facilities.
Well it's well maintained.
Although it's old -- -- trip over.
Under any circumstances it's it's very heavily invested in.
But no one would build a new refinery in California Jerry -- -- they really can't.
And that's gets into the third problem Sacramento.
If anybody and -- California's unhappy they need to look at Sacramento it's regulation -- granted.
It is the most regulated.
State in the country when it comes to fossil fuels.
And so whether it's environmental regulations.
Business regulations labor regulations.
Land use regulations.
No one would invest in a new refinery in California it would be impossible to make it happen.
But now California your question keeps growing -- bright California have now the highest prices in the nation and I want to read you.
Something -- AAA said recently we have never seen -- gas price spike like this this is.
Brand new territory.
We just don't know how quickly they'll get -- -- supplies back online that we need.
So it sounds like California could be eat -- even more difficult trouble here prices could go even higher do you believe that.
I think it's gonna get worse before it gets better the Chevron fire up north has been problematic.
The Exxon problem but what it also sounds like is that inventories are at -- a ten year low.
What inventories are low.
Then the way you distribute gasoline is you take care of your contractual customers first.
And your spot customers can wait.
And they may wait a long time they may run out of gas -- and already -- start running out of gas yes and as they start running out of gas guess what happens.
Everybody goes to tank up because they don't wanna -- -- -- and then everybody runs out of gas.
Let's talk about the national stage for just a second because we've been seeing prices go higher and higher.
Triple -- reporting that for the six straight weeks now the daily national average -- a new all time record for the calendar day.
And -- expecting prices to continue higher through the end of the year do you see the same trend.
East Coast and West Coast of this country have the biggest problems.
Oldest refineries.
Hard to maintain on accidents do happen buyers happen.
We just had a fire in Houston in in the past week at an Exxon refinery and so these incidences occur.
There is this incredible.
Denial.
On the part of government officials especially federal and especially states like New York in California.
That this industry could just take care of itself but let's tax -- let's regulate it let's make it more and more difficult because we don't.
Like oil while my friend meanwhile has ever since -- embarrassing gets nineteen billion in tax subsidies.
Ninety 1000000000 February liquidity you can't put it if you can't put -- the -- -- like.
Being there is a complete disconnect -- between what the government is promoting and what citizens need.
And guess who gets hurt in the end we -- Oil companies those citizens get hurt we -- -- got that right John -- Meister thanks for coming on tonight always a pleasure to have you wanna show thank you so much.
