Back when I used to visit my late parents in Prescott, Ariz. five times a year, I used to stock up on Ehrenberg, just across the Colorado River. Then on my way home I fill up there again before crossing the bridge and back to Orange County. I’ll also take a box of stogies to avoid Rob Reiner’s Proposition 10 tobacco tax from 1998.
I say this because this month the California Energy Commission is holding workshops to implement Senate Bill X1-2, called the California Gas Price Gouging and Transparency Law, which funds the Price Gouging Penalty Fund. How’s that for two loaded titles? And within the CEC, SB X1-2 established two new state bureaucracies: the Division of Petroleum Market Oversight; and the Independent Consumer Fuels Advisory Committee to advise the CEC and the DPMO. There will be a test tomorrow with all the new acronyms.
I bet you two new Rolls Royces the functionaries will see a lot of “gouging” to ensure they continue to get their soft salaries and benefits.
Signed by Gov. Gavin Newsom is the bill and constantly attacks Big Oil for “gouging” Californians with the pump. No doubt that is his excuse when the Florida Gov. Ron DeSantis will bring up high prices in their debate on November 30. That’s why I always look at the cross-Colorado River comparison when writing about high gas prices in the Golden State.
As I write, according to GasBuddy.com, in Blythe a 76 station charges $4.99 for regular gas. Gouging. Across the river at Ehrenberg 76, it’s $3.49. Or less than $1.50. If Phillips 76, can get $1.50 gouging in California, why don’t they gouge the same in Arizona a few miles East?
Let’s look at taxes first. According to the Tax Foundation, California’s gas tax clocks in at 77.9 cents per gallon, the highest in the nation by far. Next is Illinois at 66.5 cents. Arizona is only 19 cents. So, there, we account for 58.9 cents of the $1.50 price difference between the Golden State and the Grand Canyon State.
Back when I was former state Senator John Moorlach’s press secretary, in 2018 he introduced Senate Bill 1074. It would have required every gas pump to display a “sign showing a list of applicable state and federal fuel taxes per gallon.” Democrats killed it in committee. It would have brought real transparency to the pump, the last thing Newsom and tax-raising lawmakers want. Better to blame Big Oil.
Besides taxes, what other factors cause the price gap between Arizona and other states? A June study by Stillwater Associates blamed California’s “unique fuel specifications,” which include two different fuel mixes for summer and winter; “isolated supply logistics that make it vulnerable to unplanned refinery outages,” since the state is effectively a fuel “island” and cannot pump Texas tea during shortages; and two climate change programs, the Low Carbon Fuel Standard and Cap & Trade.
A 2021 study by the Washington Policy Center found, “The gap between US gas prices and California’s increase of 61.5 cents per gallon since LCFS was implemented” in 2011. But 50 cents of that is the increase in California’s 2017 gas tax of 50 cents. So the difference would be 11.5 cents from LFCS.
An October Cap & Trade analysis by California’s nonpartisan Legislative Analyst noted that the California Air Resources Board “estimates that the cap-and-trade program adds about 27 cents to each gallon of retail gasoline sold in California .”
Let’s add the culprits: tax 58.9 cents; LCFS 11.5 cents; Cap & Trade 27 cents. Total: 97.4 cents. That leaves another 52.6 cents to reach the $1.50 gap in Arizona. That is for various mixes and isolations, for which I could not find a specific analysis. And now throw in additional costs to producers to comply with the new gouging law.
No need for new management and advisory bureaucracies. We now know the reason for higher gas prices in California: the tax and regulatory gouging of the state itself.