Flanked by electric vehicles, Gov. Gavin Newsom announces a ban on gas-powered vehicles sales in 2035. Image from livestream
On June 23, California had the country’s highest gasoline prices, $6.36 a gallon, according to AAA. So legislators are opening an investigation to find the villains responsible. Here’s a hint that will help them in their search: There’s no need to look far for the scoundrels because they are inside the building.
Assembly Speaker Anthony Rendon, who announced the formation of a bipartisan committee charged with finding ways the state can reduce gas prices, promised lawmakers will “stand up to the profiteers abusing a historic situation to suck profits from Californians’ wallets.”
There “is no excuse for the actions of those who pin California drivers down with a foot on our necks and a hand in our pockets,” he said.
The committee will commence its enormous waste of time and public resources within weeks.
The story behind high gas prices begins with a president who as a candidate said “I guarantee you we’re going to end fossil fuel,” then while in office actively obstructed energy projects. Not long after taking his oath, Joe Biden almost immediately shut down new oil and gas leases on federal lands and in waters, eventually killed the Keystone XL pipeline project, and a little more than a year ago “suspended all activities related to the implementation of the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge” that President Donald Trump had approved.
Then just days ago, Biden Energy Secretary Jennifer Granholm highlighted the administration’s policy incoherence when she told CNN that “today we need” the supply of gasoline to increase, then added but “of course in five or 10 years, actually in the immediate, we are also pressing on the accelerator if you will to move toward clean energy so that we don’t have to be under the thumb of petro-dictators.”
In other words, oil companies are expected to boost their output today, then right away begin dismantling their operations — because the White House says so.
Investors are not unaware of the administration’s agenda, nor are oil company executives. Why capitalize an industry that the White House wants to put out of business? Why bother with expensive and often long-term repairs, upgrades and new construction when the president tells the world “we’re going through an incredible transition” that will lead us to be “less reliant on fossil fuels”?
Consequently, production falls and with no corresponding drop in demand, prices have to rise. Talk about profiteering and “ripping off California consumers” is just so much meaningless yammering.
While the Biden administration’s policies have affected the entire country, California has a set of problems all its own, beginning with motor fuel taxes. At 68 cents a gallon, this state has the country’s highest gasoline tax. On July 1, another 2.8 cents was added to each gallon to pay for Senate Bill 1, the $52 billion road repair legislation that has increased gas taxes every year since 2019.
But that’s only at the surface of a problem that goes far deeper.
For instance, the state’s cap-and-trade program now adds 24 cents to a gallon of gasoline, according to the Western States Petroleum Association, while the California Carbon Fuel Standard loads on more than 22 cents per gallon.
Then there is the reformulated fuel blend, mandated by the state Air Resources Board which is more expensive to produce than conventional fuels. Its additional costs — 10 to 15 cents a gallon — are passed on to drivers in the same way that other policy-caused costs are dropped on consumers.
Though it might seem as if a point of desperation has been reached, more punishment is ahead for Californians. Gov. Gavin Newsom has adopted a policy that has both immediate and future effects: Late last year, as prices were climbing, he called for a ban on all drilling in the state that holds more crude reserves than all but three other states — yet is seventh in oil production — by 2045.
Even though they know why prices are so steep, lawmakers will carry out their charade, and line up the usual suspects. They will blame anyone but themselves.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.