Rising Prices of Calif. Crude Consistent with Market Changes — GAO

Price differences between California heavy crude and benchmark West Texas Intermediate (WTI) are “consistent” with changing market conditions and apparently not the result of price manipulation, according to a Government Accountability Office report released yesterday.

Two California lawmakers had asked GAO to explore the issue due to concerns about possible price manipulation, which arose as the differential jumped in recent years.

The greatest rise in the price differential between California crudes and WTI began in mid-2004 and continued in 2005. The difference between the price of California’s Kern River and WTI crude rose from roughly $6 per barrel to $15 in that period, GAO notes.

The differences between WTI and various California oils have fallen but remain high by historical standards, GAO says. The report tracked three California oils, the heavy Kern River and Thums, and the intermediate Line 63. The report concludes these changes are the result of several market trends.

Greenwire