It’s widely acknowledged that California is one of the most expensive states in the country. Residents often compromise financial stability for the sake of the state’s desirable weather and lifestyle.
Nevertheless, the current gas prices in California, which consistently hover around $2 to $3 above the national average, are putting significant pressure on Californians.
According to CalMatters, a nonpartisan and nonprofit news organization covering all aspects of the Golden State, the state’s Energy Commission is poised to deliberate on whether to take a significant step towards imposing penalties on windfall oil profits and expanding the data collection capabilities of its new oversight agency.
Approximately a year ago, Governor Gavin Newsom called for a special legislative session to address the soaring fuel costs. He attributed the high prices to the practices of oil companies, labeling them as “greedy and manipulative.” Newsom pointed out that the substantial price gap between California and other regions was “inexplicable.”
Newsom expressed his frustration, stating, “This is just rank price-gouging. There’s nothing to justify it. Nothing. Not one thing.”
Rather than directly penalizing the oil companies, the session opted for the creation of another bureaucratic entity, which now requires these companies to provide detailed reports on their operations and finances.
Maintenance-related shutdowns at multiple California refineries have been attributed by analysts to the price hikes, leading to a restricted supply of a specific gasoline blend mandated by the state to mitigate pollution.
During that period, a representative from the oil industry dismissed Governor Newsom’s new commission as a mere political maneuver aimed at garnering support from environmentally conscious constituents who often view oil companies negatively.
Kevin Slagle, a spokesperson for the Western States Petroleum Association, expressed skepticism, stating, “If this was anything other than a political stunt, the governor wouldn’t wait two months and would call the special session now, before the election. This industry is prepared to collaborate immediately on viable solutions for energy costs and reliability, if that is the Governor’s genuine interest.”
Governor Newsom’s ongoing battle against the oil industry has now shifted the burden onto consumers at the gas pump, a fight that doesn’t look like it has an end.
Patrick De Haan, the head of petroleum analysis for GasBuddy, pointed out, “There’s a lot that’s going wrong. First, the rising price of oil, but the lack of refining capacity, a special blend that’s only required in California, high taxes, a cap-and-trade program all of that. When prices are running normally, California is still about a dollar a gallon above everyone else.”
According to AAA, the current national average for gas in the U.S. stands at $3.83, which is more than $2 less than the California average.
Governor Newsom questioned this significant difference, stating, “There is no justification for that. You can look at all the environmental rules and regulations and taxes that the state imposes compared to the national average, and you’re not even going to get to a dollar. So where is that mystery surcharge?”
The governor explained that the substantial gap between the national and state averages prompted his office to establish the Division of Petroleum Market Oversight.