Rick, you have a good point. A dilapidated, two-bedroom, one-bath fixer-upper costs half a million bucks around here (god knows how I'm going to stay here after college!). Supply and demand, I guess... But while there's high demand for and limited supply of housing around here, I can't imagine the supply of oil/gas/diesel in this state is less than anywhere else (particularly non-oil-producing states). Chuck's link seems to disagree, but to quote form Tony O's LA Times article:

During the blackouts, electricity barons like Ken Lay blamed the crisis on overuse and market restraints, but state investigations later found the real problem was that unregulated electricity plants were strategically shut down to reduce supply and make prices skyrocket.

Similarly, California's special gasoline formulation — as required by the federal government under Clean Air rules — has been made to appear rare by the small number of refiners that make the special mix and have gradually closed refining plants.

$2.40 sounds really cheap for biodiesel; I've only heard of it being in the $2.49-$2.99 range. The biodiesel at my local station is made from fresh soy (I think) oil; not used/recycled restaurant oil, which is the reason for the higher price (or so they tell say).

__________________
'81 300TD Wagon 355k (Miss Diesel)
'83 300SD 180k
'84 500SEL 190k (Parting it out)