Oil prices skyrocket to new highs for California

California's gas prices are now the highest in the nation– eclipsing even Hawaii and Alaska, which almost always have the highest in the country. KUSI's Ed Lenderman has been looking into “why” we're paying more than anyone else and reports on the answers.

Almost too many factors to count as to why our prices are so much higher, but forget Libya say the experts. The biggest contributors are– oil speculation and our state's non-competitive gasoline market.

It's an attention getter if you're filling up this week, a Mobil station just off the I-5 in Middletown, where regular is $4.01 a gallon and premium is $4.17.

Over the years we've been told that environmentally friendly Californians pay a steep price for cleaner-burning gasoline. So let's begin with the tax issue.

The state excises a tax on a gallon of gas which is 35.3 cents. That's on top of the federal excise tax of 18.4 cents. But wait there's sales tax, which is figured on the total, what amounts to a tax on a tax. So, if you're paying  $3.88 a gallon, 64 cents is going to the government.

This is also the time of year when we're shifting to our spring blend of gas– again, with the environment in mind. That means refinery shut-downs and we tend to pay on average about 38 cents a gallon more than the rest of the United States.

But if you talk to Charles Langley of the Utility Consumers Action Network, we're missing the bigger picture as to why. “Take the “and” out, it's due largely to an anti-competitive environment at the wholesale level,” said Langley. He also says there's no incentive, for the oil industry to be competitive in California, bolstering his argument with the fact that Arco and Chevron trade each other fuel when they run out, although they each have their own blends.

Then, Langley says, there's the huge role oil speculation is playing. California, gets its oil mostly from Canada, Mexico and Alaska.

The unrest in Lybia is driving up prices, believe it or not, Langley adds saying, domestically, the country has a  glut of oil but the speculators are getting what he says is a “fear premium,” meaning the speculators are holding oil hostage.

Any excuse to create a shortage or create the perception there's that theres a shortage will drive up prices and that's why we pay some of the highest gas prices in the country.

Oil speculation was also a huge issue in 2008, when gasoline prices peaked at $4.62 a gallon in June.