SACRAMENTO, Calif., March 24 (Reuters) - With California drivers paying the steepest pump prices in the United States, state officials are considering proposals, including a state-run gasoline bank, aimed at easing future fuel price spikes and reducing the state's dependence on petroleum.
The California Energy Commission and state Air Resources Board will present final recommendations in June to Gov. Gray Davis and the legislature on how to deal with heavy demand that will likely surge more as the state's population booms.
"California is not totally sufficient in gasoline supplies," Energy Commission Rob Schlichting said on Monday. "That is a problem that will get worse as we get more cars and population."
One of the proposals drawing attention is a plan that would set up a gasoline bank in the state to reserve fuel for times when supplies are tight and prices rising, Schlichting said.
Officials also are considering extending a pipeline from Arizona to bring in more fuel to the nation's most populous state, Schlichting said.
Other ideas include getting people to use less fuel by levying higher gasoline taxes or providing financial incentives or rebates for driving fuel-efficient vehicles, he added.
This week the commission and the California Public Utilities Commission are due to report back to the governor on an investigation into the state's swelling pump prices.
California is the nation's fourth-largest crude oil producer but with the current population of 34 million residents expected to soar in the coming decades, officials are worried about severe energy crunches on the horizon.
This, and the fact the state got socked with sky-high natural gas prices and rolling blackouts during a recent energy crisis spurred lawmakers to direct the two state agencies to look for ways to head off any future energy problems.
California is more vulnerable to gasoline shortages than most states since its strict pollution laws require motorists to tank up on clean-burning gasolines not made elsewhere in the country - a factor that adds to their higher cost.
David Hackett, a energy consultant whose company Stillwater Associates prepared a report on the proposals for the commission, added California's aging infrastructure makes it difficult to quickly get crude to refineries in times of shortages through ports or pipelines.
Establishing a gasoline bank, however, could solve this problem and save the state hundreds of millions of dollars by keeping a lid on volatile price swings, he said.
The reserve plan would work with the state purchasing gasoline and then setting up a bank where customers could withdraw fuel when needed, Hackett said. The constant flow would also address the issue of gasoline's short shelf life.
"People would make withdrawals and then they would have to replace the volume," Hackett said. "We anticipate there would be a fair amount of flow through it."