The role of these factors — and the lack of scrutiny — demonstrate that policymakers must pay close attention to refiner maintenance practices to attenuate spikes in gasoline prices.
These incentives are strongest for refiners that operate only one refinery producing California grades. If they experience an outage, they miss out on the windfall. Multi-refinery operators thus have an incentive to schedule more routine maintenance. And depending on repair costs, the windfall profits earned reduce their incentives to better maintain their equipment. If repair costs are not too high relative to maintenance costs, they will do less maintenance, and unscheduled downtime will increase.
To this end, I asked the California Energy Commission to allow me to examine the production data that all California gasoline refiners report monthly. Unfortunately, current law only allows the commission and its employees to examine the data. This restriction prevents academic researchers from producing work that could help the Legislature and the energy commission better regulate gasoline markets.