Image: Brendan Lynch/Axios
A new state report says that “government interference in the free market” has pushed up Utah’s gas prices by forcing western oil refineries to close and reducing supply.
- Gas prices in Utah remain well above the national average.
- However, a closer look at recent refinery closures casts doubt on the report’s conclusion that climate-focused “regulation” is primarily to blame.
Driving the news: In the report commissioned by Gov. Spencer Cox, the state Department of Energy Development found that “west coast demand” for gas in Utah was driving prices higher.
- While refining capacity in Utah has grown 24% over the past decade, it has declined across the western states as a whole.
What you say: “We now understand why gas prices are high in Utah and can work to increase supply and lower prices,” Cox tweeted.
- It’s unclear how Utah could increase its supply with refineries already at capacity and crude oil production higher than any year on record.
Details: The report blames federal and state “decarbonization” policies for the slowdown in oil refining, citing “national rhetoric and government involvement in reducing fossil fuel use.”
- Government incentives have prompted refiners to switch from gasoline to biofuel products, the report says, and a federal analysis this summer confirmed those switches are contributing to high gas prices in the West.
- It also highlights California’s aggressive environmental regulations, arguing that they have caused local refiners to slow down, hamper supplies and drive 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 regulations limit its imports from other states.
Yes but: Much of the reduced refining capacity in the west originated outside of California, and the refiners themselves gave reasons unrelated to government intervention.
- In terms of combined volume, Alaska and Hawaii have contributed even more to the loss of refining capacity in the West than California over the past decade.
Reality check: Eastern states are not exempt from federal regulations but still enjoy lower rates.
- The East has many more pipelines connected to cheap fuel from the Gulf Coast – a supply Western states cannot tap into.
Between the lines: The report fails to recognize the threat of climate change, saying only “some” refinery regulations are warranted to limit air pollution in Utah.
- 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 to the Mountain West, the report said.
- The authors also recommend more efficient public transportation and government messaging to reduce Utahns’ fuel consumption, which has been growing faster than the population.