Gavin Newsom can’t prove price gouging at the pump but wants new refinery law

Just because there is no price gouging, dopes not mean you can’t use it as an excuse to RAISE the cost of gas in California.  Gouging?  The cost of gas in California is almost $1.50 higher than the national average—but taxes are almost 100% of that.  Add to this limiting needed refineries, ending of fracking, closing the oil fields in Kern County—government is the cause of high gas prices.

“However Newsom has never offered any persuasive evidence of such behavior, nor has it been confirmed by those who have seriously examined the factors that cause California gas prices to be the highest, or nearly the highest, of any state.

Severin Borenstein, a UC Berkeley economist regarded as the state’s leading expert on the issue, parsed the differential in a 2023 paper, pointing out that California’s direct and indirect taxes on fuel amount to nearly $1 per gallon — 70 cents higher than the national average of such taxes — and the state’s unique fuel blend to battle smog adds another dime.

Borenstein’s calculations leave what he calls the “mystery gasoline surcharge” of about 43 cents a gallon that cannot be directly attributed to crude oil prices, California’s taxes or other obvious factors. However, at least some of it reflects the relatively high costs of doing any kind of business in California — rents, electricity and other utilities, wages and regulatory overhead, for example.

Like an arsonist, he caused the high prices, now wants to “end” them—by raising the cost of gas!  So far even the State Senate Democrats want no part of this and are refusing to call a Special Session.

Gavin Newsom can’t prove price gouging at the pump but wants new refinery law

by Dan Walters. CalMatters,  9/17/24   https://calmatters.org/commentary/2024/09/high-gas-prices-newsom-price-gouging/

It’s time to blow the whistle on the farcical efforts of California’s politicians — especially Gov. Gavin Newsom — to reduce the state’s high gasoline prices.

Newsom’s demand that the Legislature, which adjourned for the year in early September, reconvene in a special session on gas prices continues his crusade against the oil industry, charging it with price gouging.

However Newsom has never offered any persuasive evidence of such behavior, nor has it been confirmed by those who have seriously examined the factors that cause California gas prices to be the highest, or nearly the highest, of any state.

Severin Borenstein, a UC Berkeley economist regarded as the state’s leading expert on the issue, parsed the differential in a 2023 paper, pointing out that California’s direct and indirect taxes on fuel amount to nearly $1 per gallon — 70 cents higher than the national average of such taxes — and the state’s unique fuel blend to battle smog adds another dime.

Borenstein’s calculations leave what he calls the “mystery gasoline surcharge” of about 43 cents a gallon that cannot be directly attributed to crude oil prices, California’s taxes or other obvious factors. However, at least some of it reflects the relatively high costs of doing any kind of business in California — rents, electricity and other utilities, wages and regulatory overhead, for example.

Newsom’s latest foray is a demand that the Legislature order refineries to put more fuel into storage, as a buffer against price spikes caused by refinery outages or other factors.

Superficially that sounds plausible, but it assumes that refiners have storage capacity to comply with such a law or could easily expand storage. But storage is not without its costs, which could drive retail prices even higher.

The state Energy Commission declared in a recent analysis that Newsom’s proposal has the potential to “artificially create shortages in downstream markets” and “increase average prices.”

The commission says “there may be a case for additional storage as a matter of maintaining supply resiliency for the next two decades, but such investments do pose a stranded assets risk. More analysis is needed to determine whether the benefits of enhanced supply resiliency are worth the investment in the near term.”

Newsom wants the Legislature to act immediately without “more analysis,” which is the antithesis of prudent lawmaking. Republican legislators are being semi-complicit by agreeing with Newsom that there is a gasoline price crisis. But they imprudently propose to lower or eliminate gas taxes, which are vital to the restoration of California’s much-neglected highway system.