California's Progressive Socialism Strangles Success

What the rest of country can get from the actions of California politics is what ever they do to solve their problems, the rest of the country has to do just the opposite.

With Jerry Brown pushing Prop 30, increased sales tax and a new tax on upper incomes, and the opposition with Prop 32 that advocates firing bad teachers, and Brown advocating the train that will saddle the state with 68 billion in new debt along with the 173 billion they are already on the hook for, the residents must know that their future is doomed and the future of their children is also doomed.

The fact that 225,000 are leaving the state every year doesn't seem to have any effect on the politicians. Oh wait there's more crazyness, Mr Obama is slated to win California by 20 points. Little wonder then why the rest of the country understands how California's progressive socialism is not the way to solve problems.

California Gasoline Consumers Hurt by Few Suppliers, Outages
Source: Ken Bensinger, "California Gasoline Consumers Hurt by Few Suppliers, Outages," Los Angeles Times, October 22, 2012.

October 26, 2012
Conventional economic wisdom dictates that lack of competition can handicap the local market it functions in. California is riddled with these market fractures. This is particularly evident in the state's energy economy. Since 1980s, the number of refiners operating in California has decreased by half; as a result, gasoline prices are prone to price spikes, which can impair the local economy, says the Los Angeles Times.

When it comes to the gasoline market, the Golden State is largely protected from external competitions -- paralleling the oligopolies present in the oil producing economies of the Middle East.

•The state's strict clean-air rules mandate a specially formulated blend used nowhere else in the country.
•Producers in places such as Louisiana or Texas could make it, but there are no pipelines to get it to the West Coast quickly and cheaply.
•As a result, virtually all 14.6 billion gallons of gasoline sold in California last year were made by nine companies that own the state's refineries.
•Three of them control 54 percent of the market.

The lack of competition is manifested at the retail sector.

•Around 85 percent of gas stations offer brands such as Chevron, Arco, Valero or Mobil.
•Additionally, the pump prices are directly or indirectly controlled by refiners.

In contrast, in other states, such as Texas, independent, non-branded fueling posts make up around 50 percent of the market, thus more competition, which buffers against price volatility that harms local economies.

Given that gas is an integral input for numerous economic activities, by extension, it means that the higher prices will translate to a higher cost of doing business in California.

Further complicating the picture, the current push on limiting greenhouse gas emission and promoting alternative fuel opportunities may coerce nearly eight of California's refineries to shut down in the coming years. This thrusts California's energy supply edifice into a more fragile state, characterizing the energy marketplace with monopolistic features.

In the short run, it makes the market vulnerable to price hikes, and in the long run, this can have major detrimental ramifications.