Last Updated on September 26, 2023 by BVN
Phyllis Kimber Wilcox
Gas prices in California continue to climb, making the cost of filling up at the pump even more arduous.
Such high costs are creating tensions among consumers and reports of people siphoning gas from parked cars by drilling holes into gas tanks have increased.
Oil companies and distributors blame recent price hikes on events overseas or problems at local refineries but consumer advocacy groups disagree, they are blaming cost hikes on profit seeking. This is not the first time advocacy groups have accused oil suppliers and refiners of unethical practices. California pays some of the highest prices for energy in the country.
As reported by KTLA News, oil companies, refiners, producers and suppliers also explain price differences as an outgrowth of several factors including California’s stricter regulatory and environmental policies.
The California Energy Commission however, explains the state’s high gas prices as follows, “Filling up the tank in California also costs more since gasoline prices are higher on average than the rest of the United States for a few reasons. These reasons include the isolated nature of the state’s transportation fuels market, a special gasoline recipe that reduces air pollution, environmental program costs, and taxes.”
When discussing the isolated nature of California’s fuels market the California Energy Commission further explains the gas bought in the state, by law, must be refined here and the refineries and distribution centers are far from “alternative sources of resupply” in critical situations.
Consumer groups insist that greed is the issue. According to a report by Consumer Watchdog, a non partisan consumer advocacy group. “Five refiners—Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero—make 97% of the state’s gasoline.” They are in a position to restrict gasoline supply to drive up gas prices. They have consistently restricted supply and artificially driven up their prices significantly in excess of their costs.”
According to the Automobile Club of Southern California, in Riverside, California, the average price for regular gasoline is $5.90 per gallon while in San Bernardino the average price for regular gasoline is a little over $5.94 a gallon.
Governor Gavin Newsom believes oil companies are price gouging. This after Californians paid the highest prices ever for gas in the state, last year–between the months of August and October, prompting the nonpartisan advocacy group, Consumer Watchdog, to make the case to the Governor’s office for a windfall profit tax against California Oil refiners.
“The proof of the gouging is in the oil refiners own profits reported to investors,” said Jamie Court President of Consumer Watchdog. He further noted that when the California gap with US gas prices was $1.25 per gallon in June, California refiners reported unprecedented profits in the West of more than $1 per gallon – up to ten times their return last year.
Now, according to Court, the California gouge gap with US prices has doubled to nearly $3 per gallon.
“California oil refiners’ windfall profits have surely grown and could have doubled because their production costs have not increased,” Court declared. “The truth will come out in third quarter investor reports released at the end of the month.”
Historically, every gas price spike in California shows up as a profit spike as well. “The only way to rein in these outrageous gas prices is to take back the oil refiners excess profits,” Court advised.
The ongoing battle to control the price consumers pay for energy in the state is extensive but a few of the highlights include hearings in past years before the California Energy Committee to address the concern that oil refineries are overpricing the gas sold to name brand gas stations who must by law purchase their gas from California state refineries. While independent gas stations on the other hand, are allowed to purchase their gas from another source,
Other efforts aimed at curtailing prices are culminated in a bill signed by the Governor Newsom allowing the state to assess penalties against gas refineries accused of overpricing. This was followed by what has been called an attempt to weaken the legislation.
These and other concerns have. prompted the Governor to announce a lawsuit against several large oil companies over the negative effects of their business models on the climate. In his announcement of the suit made in September at New York’s Annual Climate Week, Newsom stated in part, “[T]he issue is fossil fuels and the issue is the deceit from these companies”
Spokespersons for the oil industry claim that the Governor’s lawsuit and others like it lack merit and are attempts to “politicize” as well as “demonize” an entire industry.
New California Watchdog
In order to address these ongoing issues, Governor Newsom has created a new position, that of an Oil Watchdog. Tai Milder, an appointee with the State of California’s Energy Commission, has been tasked with identifying illegal or irregular behavior, as well as structural or technical problems by oil companies and to refer them to the California Attorney General’s Office for prosecution.