(AP File Photo/Marcio Jose Sanchez, File)
Back when I visited my late parents in Prescott, Ariz. five times a year, I always filled up in Ehrenberg, just across the Colorado River. Then on the way back I’d fill up there again before heading across the bridge and back to Orange County. I’d also pick up a box of stogies to avoid Rob Reiner’s Proposition 10 tobacco tax from 1998.
I bring this up because this month the California Energy Commission is holding workshops to implement Senate Bill X1-2, actually called the California Gas Price Gouging and Transparency Law, which funds the Price Gouging Penalty Fund. How’s that for two loaded titles? And inside the CEC, SB X1-2 sets up 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 on all the new acronyms.
I’ll bet you two new Rolls Royces the functionaries find lots of “gouging” to ensure they keep getting their cushy pay and benefits.
Gov. Gavin Newsom signed the bill and is always attacking Big Oil for “gouging” Californians at the pump. No doubt that will be his excuse if Florida Gov. Ron DeSantis brings up the high prices at their Nov. 30 debate. That’s why I always look to the cross-Colorado River comparison when writing about the Golden State’s high gas prices.
As I write, according to GasBuddy.com, in Blythe a 76 station is charging $4.99 for regular petrol. Gouging. Across the river at the Ehrenberg 76, it’s $3.49. Or $1.50 less. If Phillips 76, can get $1.50 gouging in California, why wouldn’t they gouge the same in Arizona a couple miles to the East?
Let’s first look at the taxes. According to the Tax Foundation, California’s gas taxes clock at 77.9 cents a gallon, the highest in the nation by far. Next is Illinois at 66.5 cents. Arizona is just 19 cents. So, right 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 Sen. 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.” The Democrats killed it in committee. It would have brought real transparency at the pump, the last thing Newsom and the legislative tax-raisers want. Better to blame Big Oil.
Aside from taxes, what other reasons cause the price gap with Arizona and the other states? A June study by Stillwater Associates blamed California’s “unique gasoline specifications,” which include two different fuel blends for summer and winter; “isolated supply logistics that make it susceptible to unplanned refinery outages,” because the state effectively is a fuel “island” and can’t pump in Texas tea during a shortage; 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 U.S. gas prices and California’s increased 61.5 cents per gallon since the LCFS was implemented” in 2011. But 50 cents of that was the 2017 California gas tax increase of 50 cents. So the difference would be 11.5 cents from the LFCS.
An October analysis of Cap & Trade by California’s nonpartisan Legislative Analyst noted 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 up the culprits: taxes 58.9 cents; LCFS 11.5 cents; Cap & Trade 27 cents. Total: 97.4 cents. That still leaves another 52.6 cents to get to the $1.50 gap with Arizona. That would be for different blends and isolation, for which I couldn’t find any specific analysis. And now throw in the added costs to producers of complying with the new gouging law.
There’s no need for the new oversight and advisory bureaucracies. We already know the cause of higher prices for gas in California: the tax and regulatory gouging by the state itself.
John Seiler is on the SCNG Editorial Board; he blogs at johnseiler.substack.com