By Emily Hoeven
What do California gas prices and the state’s unwieldy database for tracking donations to political campaigns have in common?
Both were the subject of intense hearings in Sacramento on Tuesday, six days before state lawmakers are set to return to the Capitol to get sworn into office and convene a special session called by Gov. Gavin Newsom to consider a new tax on oil companies. The governor in October accused the industry of “rank price-gouging,” citing a record-high, “inexplicable” gap between average gas prices in California and the nation.
But testimony during the California Energy Commission hearing suggests that the reasons for that gap are more complicated, CalMatters economy reporter Grace Gedye writes:
Energy commission staff said that in September and October, four refineries dealt with maintenance issues, which reduced the amount of gas they could produce. (Because some refineries have closed in recent years, seemingly small maintenance issues can have outsized effects.) At the same time, California had a limited amount of gas stored to make up the difference, and it’s difficult to import gas into the state quickly.
- Catherine Reheis-Boyd, president of the Western States Petroleum Association, a lobbying group that represents oil companies: Due to state policies that have resulted in an isolated gas market and limited refinery capacity, “I’m just amazed that we’re all surprised this has an impact on cost.”
Notably absent from the hearing, however, were oil and gas executives from five of the state’s largest refineries. All declined to participate, with some saying antitrust law limited their ability to share information. California Energy Commissioner Patty Monahan called their absence “profoundly disappointing,” and Newsom tweeted a video of their empty chairs.
- Newsom said in a statement: “The oil industry had their chance today to explain why they made record profits at our expense but they chose to stonewall us. That’s because they have no explanation — big polluters are lining their pockets while they cause financial pain for millions of California families and threaten the very future of our planet. With the Legislature’s support and engagement, we’re going to hold these companies accountable with a price gouging penalty that will deliver relief to Californians.”
But the state shouldn’t focus exclusively on refineries or one-off gas price spikes, said Severin Borenstein, an energy economist at UC Berkeley. He noted that much of the extra cost of gas in California that can’t be explained by the state’s higher taxes and environmental policies is added after gas is refined — often by the marketing, distribution and retail sectors, such as gas stations.
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