I have a dream. In it, the CEOs of six major oil companies have been called into a hearing room and asked by a committee chairman to swear under oath that zone pricing is not addictive and good for the health of their companies.

They rise up and repeat in unison: "Zone pricing is not addictive and good for our health." When asked to respond, I say: "Zone pricing is bad for the California consumer, who is addicted to having plentiful and cheap gasoline available."

This might seem far-fetched but Californians have become so accustomed to having cheap gasoline that no one seems to remember the energy crises of the 1970s. In 1973, the energy crisis was caused by our crude oil imports being cut off by an oil cartel called OPEC. The difference now is that the California gasoline supply crisis is strictly of our own making.

The California Air Resources Board set such a high standard for the state's gasoline formulation to reduce air emissions that few other refiners outside the state are willing to produce it. They have created an island where the gasoline supply is controlled by major oil companies.

The problem with obtaining a constant supply of gasoline to meet demand is lack of competition. There are several things that could be done. One is to have major oil companies switch from zone pricing to a gasoline rack pricing system, allowing their branded dealers to look for the best prices instead of being locked into zoned rates.

Zone pricing is the last remaining bastion of a system implemented in the days when major oil companies in California still had competition from independent refiners and stations. Those days are long gone with the onset of tank replacement expenses at gasoline stations that can run as much as $300,000 per site.

On April 11, Rob Schlichting, spokesman for the energy commission, blamed major oil companies, instead of dealers, for keeping the average price of gasoline over $2 per gallon in California. Sen. Dianne Feinstein joined the fray by sending the major oil companies a letter saying she is watching the gasoline-pricing situation closely.

So now it is time to tackle the zone-pricing system. It basically enables the major oil companies to identify what the gasoline consumers are willing to pay for gasoline. The only way it will be changed is by having the major oil companies voluntarily agree to change to the rack pricing system.

Californians, the major oil companies have the ball—let's put on a full-court press. Remember the adage: "You don't get what you deserve, you get what you demand."  

About the author:

Bob van der Valk is a California petroleum industry veteran and gasoline-pricing analyst. He reports on fuel-related trends and events. You can reach him by e-mail at tridemoil@aol.com or on the Web at www.4vqp.com.