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An Erroneous Supply Chain Argument

Summary:
“Silly” Arizona House Representative Republican Justin Wilmeth is making an argument for lower gasoline, etc. prices to Arizona. Justin traveled to California to ask for no cap on fuel prices at a California refinery (Arizona has no refinery). As if he does not have enough to do in AZ? Not sure what makes him think, they will not raise prices anyway and without a cap. Justin’s main beef . . . “If they were to lower production or supply, the prices would go up, and there’s not much we could do about that. That’s basic supply and demand economy . . . right there.”  No Justin, that is called Supply (Chain) manipulation versus Demand and an on-purpose decrease in Capacity to increase profits. Oh, you will not allow us to increase prices? We will

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“Silly” Arizona House Representative Republican Justin Wilmeth is making an argument for lower gasoline, etc. prices to Arizona. Justin traveled to California to ask for no cap on fuel prices at a California refinery (Arizona has no refinery). As if he does not have enough to do in AZ?

Not sure what makes him think, they will not raise prices anyway and without a cap. Justin’s main beef . . .

“If they were to lower production or supply, the prices would go up, and there’s not much we could do about that. That’s basic supply and demand economy . . . right there.” 

No Justin, that is called Supply (Chain) manipulation versus Demand and an on-purpose decrease in Capacity to increase profits. Oh, you will not allow us to increase prices? We will cut back production to force a price increase. That is called Supply Chain manipulation. Something we have today in food and other supplies from industries during and after the pandemic. That is a major cause for inflation Justin.

And there is Western States Petroleum Association’s Catherine Reheis-Boyd with some head nods of their cutting production to increase prices. Catherine . . .

“If the CEC chooses to penalize refiners making revenue over a certain number that will actually incentivize less in-state gasoline supply, not more.”

What they are looking for is “increased” profits on a unit of gasoline. That is not a supply chain issue, it is called rent-taking because we can do so and where else will you go? The news story . . .

Channel 12 News, “High Arizona gas prices may have out-of-state policies to blame”

PHOENIX — If you’re driving anywhere in Arizona, you might be feeling more pain at the pump than usual. On average, Arizonans are paying 40 cents more than the national average right now. But one Arizona state representative is worried that the price could increase even more.

Arizona relies on fuel coming from out-of-state, namely Texas and California. State Rep. Justin Wilmeth, a Republican representing constituents in north Phoenix, traveled to California because he is concerned that changes there could impact Arizonans at the pump.

“We don’t have any refineries of our own, so we are reliant on your fuel, and these decisions that you make,” Wilmeth said in a public comment at a state senate oversight hearing. 

The oversight hearing was about Senate Bill X1-2, the California Gas Price Gouging and Transparency Law, which was signed by California Governor Gavin Newsom in March of 2023 and took effect in June of 2023. 

Wilmeth is specifically concerned with this proposal because it could cap California refineries’ profits — a concern the president of the Western States Petroleum Association has as well. Catherine Reheis-Boyd said

“If the CEC chooses to penalize refiners making revenue over a certain number that will actually incentivize less in-state gasoline supply, not more.”

Wilmeth is asking California to consider a proposal that works for the entire Southwest, not just one state. Wilmeth again . . .

“If they were to lower production or supply, the prices would go up, and there’s not much we could do about that. That’s basic supply and demand economy . . . right there.” 

Steven Bradford, a Democratic state senator for California, said it is good to hear the concerns from neighboring states like Arizona. Bradford . . .

“We are not in a vacuum, that what we do in California impacts other states and sometimes the nation, and they depend on a great deal of their petroleum, their gas products from California. We need to understand that what we do will drive costs up, also in Arizona.”

No decisions have been made yet, Wilmeth said. The proposal will head to California’s other legislative body next week where it will be reviewed. 

Arizona Driving and Gasoline Usage

When talking to new housing builders. Maricopa City Planning Commission VP said 60% of the new vehicles sold in Arizona are pickup trucks. Unless they overpriced EVs, these are not the most efficient vehicles to be driving. The Planning Commissioner VP was discussing driveway and garage size for parking.

If you come to AZ, prepare for the fast speeds being driven and tailgating. There is no following a posted speed limit or a reasonable 5mph over the speed limit. On state highway 347, they have been clocked at 80-90 mph in their over-tired pickup trucks. Over a 5-year period, there were vehicle collisions on a 14 mile stretch equivalent to one every other day.

Do Arizona drivers really need a larger and cheaper supply of gasoline ordo they just need to slow down and conserve?

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