The West Coast of the U.S. has a highly concentrated supply system with serious concerns about market power and collusion in pricing. Statistical evidence indicates that California oil refiners actually increase their profit margins when global oil prices increase. Contrary to claims that the cost increases reflect California’s environmental programs, these are not correlated with gasoline prices. The reality is that gas prices are most impacted by global market dynamics, and dependence on petroleum for transportation is an expensive option in an uncertain world.

Per Chevron’s statements that it may close refineries in response to reduced imports of refined fuels, the data they cite are questionable, at best. California both imports and exports gasoline – frequently exporting more than it imports.

Mercantilism in its simplest form is government intervention in international trade to block imports and expand exports. Over the last fourteen months, the United States has embarked on the second largest set of tariffs in its history. Only the Smoot-Hawley legislation of June 17, 1930, was more significant, and Smoot-Hawley was a major cause of the Great Depression.

Quebec is in its third year of a major drought, and reservoirs continue to be drawn down to meet peak winter loads. Lower reservoirs hamper operational flexibility, which can lead to interruptions in NECEC exports, and increased imports to Quebec to address loads.