Thearrival of the last oil tankercarrying crude from the Middle East to California this week has state lawmakers on edge, and an energy expert warning of a gas price “crisis.”
Democratic and Republican assemblymembers grilled the California Energy Commission on Tuesday as they try to figure out what can be done to replace the 30% of the state’s oil typically imported from the Persian Gulf.
America’s war with Iran hasclosed off the Strait of Hormuz, and that tanker was the last to depart the region for California before war broke out. The state has no interstate gas pipelines and is heavily reliant on imports.
State lawmakers are hoping that the strait reopens soon but asked what would happen if it stays closed for the next 60 days.
Severin Borenstein, a UC Berkeley professorfamed for his coiningof California’s “mystery gasoline surcharge,” warned lawmakers that “it would be a crisis.”
He said prices of oil could go up to $40 or $80 a barrel, meaning Californiansalready facing the nation’s highest gas pricescould see up to two dollars more per gallon — a total of eight dollars per gallon on average, stretching into nine.
“I don’t think that’s implausible at all,” Borenstein said. “I think that would be a crisis, and it would be completely out of control of the state of California.”
Siva Gunda, vice chair of the energy commission, acknowledged that the state is facing a crisis. He said, however, due to lower demand from high prices that the prices should stabilize under $7 per gallon in the near term.
Gunda said the supply of oil should be good within the next six weeks, but if the crisis continues after six weeks, exposures to price increases could become concerning.
“That’s something we need to closely watch,” he said.
Source: California Post – Breaking California News, Photos & Videos
