As goes demand in California for transportation fuels, so goes demand elsewhere in the country. In this vein, stock builds in PADD V would seem to suggest that demand is suspect.
With California’s unemployment rate at 12-1/2% (the 5th highest in the nation), analysts at do not think it is hard to understand why this is so.
Per the latest batch of figures from the Bureau of Economic Analysis, consumers in the U.S. are spending 3.6 cents of their dollar on energy (primarily gasoline).
That is low in a historical context, but high given that the last time Californians had to spend this much in the pursuit of leisure was three years ago… when unemployment in the state was a mere 5%.
Therefore, times are tough in the largest car market (for the time being, cue China) in the world. Yet the state’s politicos are carrying on like the antagonist out of an Ayn Rand novel.
From Tuesday’s Los Angeles Times:
Households that get their power from the Los Angeles Department of Water and Power could see their electric bills go up between 8.8% and 28.4%, depending on where they live and how much energy they use, under a plan unveiled Monday by Mayor Antonio Villaraigosa.
Appearing with labor and environmental leaders, Villaraigosa said the proposed increases would ensure that the DWP meets his goal of securing 20% of its energy from renewable sources such as wind and solar by Dec. 31.
And, 's favorite quote from this article:
Once all the increases are in place, the DWP will receive an additional $648 million per year. Villaraigosa said the money would help pay for the hiring of “green doctors” to evaluate the energy efficiency of homes and stepped-up efforts to help residents obtain energy-efficient lightbulbs and refrigerators.
Green doctors? Jeez, what’s next…? Thought Police? To paraphrase Ayn, the lights in California are going out.
And, as we know, as goes California goes…
Stephen Schork is the Editor of and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.