San Diego Union-Tribune - Even Higer Gasoline Prices in Store

Even higher gasoline prices in store

Gasoline prices are reaching near-record levels again in California, climbing from an average of $1.71 in January to $2.11 last week. That's an increase of 40 cents a gallon this year.

If we have any hope to forestall even greater hikes, we must rapidly develop alternatives to the internal combustion engine and free California of an unnecessary, and possibly harmful, ethanol mandate.

Rather than being an alternative energy source, the ethanol mandate actually requires California to use an additional 10 percent of gasoline for eight months out of the year - causing even more upward pressure on the price at the pump. Our State is a gasoline island - we use gasoline that is cleaner burning than any other gasoline in the nation and no refiner outside of California produces the gasoline the state needs.

Plus, our state's refining capacity has shrunk over the past 30 years from over 30 refineries to 13 during a time when our population has more than doubled. And with the closure of the Shell Bakersfield refinery in October, the number will drop to 12.

Refiners in California produce about 46 million gallons of gasoline per day, while Californians use up to 42 million gallons per day. Refineries are already running at 93 percent capacity and experts believe the highest they could reach is 95 percent.

Any disruption - or even a perceived disruption - can cause gas prices to soar. This is what happened recently when there was an unplanned outage at one facility, which cut off almost 10 percent of the gasoline supply.

The California Energy Commission expects gasoline demand to increase by 2.5 percent per year compounded. And with our expected population growth to 50 million by 2020, our supply problems will get worse.

Meanwhile, ethanol makes the bad situation even worse. Because of the federal oxygenate requirement, California must blend its gasoline with ethanol even though our refiners produce gasoline that is cleaner than the gasoline that is blended under the federal reformulated gasoline program.

Using ethanol, particularly in the summer, means that gasoline needs to be refined down to an even cleaner level in order to be blended with the ethanol. Otherwise the ethanol will evaporate into the atmosphere, causing emissions from cars to increase, rather than being reduced. As a result, we lose an additional 10 percent of the gasoline supply.

For years, California has sought a waiver from the Environmental Protection Agency to this unnecessary, and detrimental, mandate. But so far, despite our repeated requests, the Bush Administration has refused to budge. Recently, I have joined with Gov. Arnold Schwarzenegger to once again urge the EPA to act on California 's plea.

Another way to increase the supply of gasoline is to close the SUV loophole. This small step would force SUVs to meet the same fuel efficiency standards as passenger cars. Currently, SUVs and light duty pickup trucks have a fuel economy standard of 20.7 miles per gallon. The federal government will require an increase in fuel economy standards for these vehicles over the next three years reaching an average of 22.2 miles per gallon. I have proposed picking up where the Bush administration's increase leaves off so that by 2011, SUVs would have to average 27.5 miles per gallon.

Closing the SUV loophole and regulating SUVs for what they are being used and marketed, as passenger vehicles, would:

•Save the U.S. 1 million barrels of oil a day

•Reduce our dependence on foreign oil imports by 10 percent

•Save SUV and light-duty truck owners hundreds of dollars each year in gasoline costs

•Prevent about 240 million tons of carbon dioxide, a greenhouse gas, from entering the atmosphere each year.

We also need more hybrids on the road. Hybrid technology is available now and will help us reduce our thirst for gasoline. Californians won't drive more, they will just need less gas to power their vehicles on their regular car trips.

Already, we have seen foreign auto makers like Toyota and Honda make huge strides regarding the implementation of hybrid technology in their vehicles. Auto manufacturers need to add more hybrids to their vehicle mix.

The investment in fuel efficient technology is paying off for Toyota . The Prius was named the 2004 Motor Trend Car of the Year, and Toyota also has announced it will release the first luxury hybrid SUV this fall.

While this does not provide immediate assistance, it does provide hope for the future. We must take real steps to reduce the volatility in gasoline prices. California needs to lower its demand for gasoline in order to increase the available supply, which will make the market less volatile and stabilize gas prices. We need relief from federal ethanol requirements. We need to close the SUV loophole. And, we need to promote existing technologies, such as hybrids, which reduce gasoline
consumption and our demand on the world's limited resources.

Feinstein is a U.S. senator from California .