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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Monday, March 17, 2008 2 key reasons why gas is spendy in Washington More refineries in the state would increase capacity and help ease prices. By Mike Benbow You don't have to live in Washington state very long to know that we get hammered here when it comes to gasoline prices. Just because we all know about the problem doesn't mean we have to like it. But according to a new study soon to be released by state Attorney General Rob McKenna, we do have to put up with it. McKenna aide Kristin Alexander told me on Friday not to expect a smoking gun when the study is released, likely on March 24. "Nobody came forth with any illegal activity," she said. "I'm not sure there are any surprises in the report." Alexander said the state's gas prices are the sixth highest in the country. There are two main culprits for that high ranking: not enough refinery capacity combined with the highest taxes in the nation. The study found that the five refineries in Washington are at capacity and are not really producing enough. When things go wrong and production drops, distributors have to buy gas, often overseas, at much higher prices, just to meet demand. The state has no control over world prices and certainly can't stop any illegal activity there. But McKenna's study didn't find any crimes that the state can do anything about, Alexander said. As mentioned above, our own government also plays a major role in prices because of its reliance on gas taxes to pay for transportation projects. In Washington, we pay 54.4 cents in taxes for every gallon. That's 18.4 cents in federal tax and 36 cents in state taxes. On Friday, gas cost an average of $3.55 a gallon. As mentioned above, the state is sixth highest in the nation when the taxes are included in the price. When they're not, our prices are the 24th highest. It sounds easy to suggest that we should lower our taxes to lower our prices. But I'm not convinced we should do that until we think of some other ways to make improvements to our terrible transportation system. I'd suggest more tolls, which I think are inevitable to help ease our gridlock, but I fear we'd just wind up with high taxes and high tolls. What we really need -- throughout the West Coast -- is some significant increases in capacity at our refineries. For years, we've been talking about how our gas is so expensive because we can't make enough to supply the region. That statement is quickly followed my comments about how environmental requirements have made new refineries nearly impossible to build. Certainly, the oil companies say, they are too expensive to build. That clearly is the problem we need to tackle. The government either needs to help the companies find a location that can be used, assist it in developing important technology or come up with some other assistance. As for cost, the oil companies are making record profits these days. I'm convinced they can find the money. They just need to be prodded into doing so. We can also talk about the importance of cutting back on our demand for gasoline. There is no question we can all do better. But that's worthy of a column all of its own. Mike Benbow: 425-339-3459 or benbow@heraldnet.com.

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