California to study feasibility of strategic gasoline reserve

California has enacted bills to study the feasibility of creating a state-owned strategic gasoline reserve and the possibility of shipping more gasoline to the state from the Gulf Coast via pipeline. The state legislature passed the bills and Gov. Gray Davis signed them last month.


California has enacted bills to study the feasibility of creating a state-owned strategic gasoline reserve and the possibility of shipping more gasoline from the Gulf Coast via pipeline.

The state legislature passed the bills and Gov. Gray Davis signed them last month.

California State Attorney Gen. Bill Lockyer said the requirement for the studies resulted from a 5-month research project on California's gasoline market.

A spokeswoman for the California Attorney General's Office said the legislature did not pass a third bill, which would have directed the state's Department of General Services to use state funds to seek a way to increase gasoline imports.

The attorney general's office had released a report on gasoline pricing in California in May. The study said a lack of competition and supply disruptions had contributed to price spikes and would recur unless steps were taken to ensure a steady flow of gasoline.

It said the price spikes that sent pump prices soaring above $2/gal during 1999 and 2000 in some parts of California eroded "the competitiveness of California businesses" and reduced state residents' real income.

Lockyer recommended that state refinery capacity be expanded and refinery problems addressed. He said the state should encourage conservation and use of alternative fuels and hybrid electric cars.

The state attorney general also supported proposals to allow branded dealers to buy gasoline from any source that meets the specifications of the brands they sell under. He advocated policies encouraging the growth of independent gasoline marketers.

The study said California gasoline demand is expected to rise from 14.5 billion gal in 1999 to 16.5 billion gal in 2010.

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