by Martin Barrett
Washington State Governor Jay Inslee visited Burien on July 20 to account for why his state has the highest gas prices in the nation. Governor Inslee laid out his case at the Highline School District Bus Maintenance facility, standing in front of four new electric school buses recently acquired by the district.
Gov. Jay Inslee gives a speech at the Highline School Bus Maintenance facility in Burien, Washington on July 20, 2023.
Governor Inslee sought to convey why families in the state are experiencing gas prices between 35 and 52 cents higher than Oregon or Idaho. This increase coincides with the CO2 Carbon Tax, which went into effect in January.
Inslee used graphs to show a significant increase in profit by energy companies over the last few years. Using 2021 as a baseline, the Governor asserted the increase in profits to price gauging and collusion. However, the impact of reduced consumption during 2020 and 2021 due to Covid lockdowns and restrictions had depressed profits, even losses during that time. The energy industry works with high fixed costs, the cost a company experiences regardless of activity, like rent or loan payments which are a fixed base. Volume, therefore, can produce large swings in profit as the revenues fall below or rise above the fixed costs.
The Governor then stated that AAA had determined that our high prices were due to shutting down the pipeline bringing fuel from the refineries up north. However, this would not explain the price gap between Washington and Oregon. Oregon has no crude oil reserves or production; its only crude oil refinery closed in 2008. The Puget Sound refineries in the state of Washington provide about 90% of the refined petroleum products, such as motor gasoline, distillate fuel oil (diesel), and jet fuel, used in Oregon.
A reporter at the gathering asked Governor Inslee if the oil companies were singling out Washington State due to the CO2 tax. Inslee was noncommittal.
The Washington State Department of Ecology released the results of the second auction of allowances to emit CO2, and prices increased 15 percent to $56.01 per metric ton (MT) of CO2. That translates into about 45 cents per gallon of gasoline and 54 cents per gallon for diesel.
Burien News is not defending big oil. We are only asking for an honest accounting of why Burienites are paying so much more for gas than other places in the nation.