California’s gas-car phaseout brings turmoil to mom-and-pop gas stations
By Tom Hallman
April 1, 2012
By most accounts, the biggest problem facing California’s gas stations has been the lack of fuel, not the lack of gas itself. It was the glut resulting from the rise in domestic production that led to the widespread bankruptcy of gas stations.
However, there is a more subtle reason why gas stations are in trouble — the state’s plan to force them out of business. In the last year alone, Californians have gone through two rounds of government auctions to buy all the licenses for the state’s gas stations: the first one netted $2.4 billion for the public; the second one came up $300 million short.
That second auction left the state with just 2,100 of the 4,000 licenses that it had been counting on from the industry; the vast majority of those were held by mom-and-pop gas stations. Those remaining were handed over to oil companies and utilities to sell their gas supplies.
The result has been an exodus from California’s gas stations as prices have dropped — a trend that has now been underway for a year and a half.
In the last month alone, at least 29 California gas stations have closed. Another 11 have announced they will be relocating to other states. Three others have announced layoffs, and 20 gas stations have closed in the last year.
For some, the pain has been severe as prices have dropped more than 10 cents in the last 12 months. In June, the average price in San Francisco was $3.42 per gallon of gas, a price that has dropped almost 20 cents since June 2010.
But the industry’s economic impact in terms of gas consumption is huge as well. While overall gasoline consumption has declined by a million gallons per day since 2008, that has mainly been in the last three months, and the slowdown has continued this year. In fact, total usage in California’s gas stations has been