Why Isn’t Calif. Gov. Newsom Celebrating Sky-High Gas Prices?

Last week, Gov. Gavin  Newsom sent a letter to the state’s energy commission, asking it to explain why gasoline prices in the state are above $4 a gallon when the national average is $2.85.

“Independent analysis suggests that an unaccounted-for price differential exists in California’s gas prices and that this price differential may stem in part from inappropriate industry practices,” Newsom wrote in his letter. “These are all important reasons for the Commission to help shed light on what’s going on in our gasoline market.”

The demand came after 19 state lawmakers asked state Atty. Gen. Xavier Becerra to investigate the “unexplained surcharge” in California prices. “This mystery surcharge happens between the refinery and retail purchase by the consumer,” Assemblyman Marc Levine said. “This is a punitive, abusive practice that Californians are paying.”

You’d think the answer would be obvious. California  now has the second highest gasoline tax in the country — 69 cents a gallon — after those same lawmakers hiked it by 12 cents in 2016. New York’s is higher by  just 9/10s of a cent.

What’s more, the state’s onerous environmental regulations have turned California into a gasoline island because meeting those rules requires special blends. 

Not only does this force prices up, the gap between California and the rest of the country has been growing. An analysis by Fueling California found that between 1992 and 2010, the price differential went from 5 cents a gallon to more than 30 cents a gallon.

On top of this is the state’s low-carbon fuel standard that is, according to the state, “designed to encourage cleaner low-carbon fuels in California.

These rules not only make California gasoline prices more expensive, but much more volatile, , since any disruption in supply can’t be made up by refiners making other, less boutique blends of gasoline. And, because these rules limit the ability of other refiners to compete in the state, they give existing refiners who supply California’s gigantic market greater pricing authority.

So, after creating what amounts to a heavily regulated, exorbitantly taxed oligopoly, the state’s politicians are scratching their heads wondering why prices are high?

Newsom would do better by his state’s residents if he were to explain to them that this is the price of the environmentalist policies the state has been pursuing with abandon for decades, rather than try to pin the blame on Big Refinery.

Instead, he’s saying that “Already, opponents of our state’s world-class environmental protections are using media reports on this issue to undermine our clean air and safety standards,” the governor wrote.

But Newsom’s complaint about sky-high gasoline prices makes even less sense when you consider his stance on carbon emissions. 

“I’ll take a back seat to no one in terms of my passion and my commitment to take the baton and raise the bar in terms of our low-carbon, green growth efforts in California,” he said.

More specifically, Newsom is a big supporter of a carbon tax as a way to cut carbon emissions. 

Why? Because the resulting higher prices would reduce demand for carbon-based fuels. “You wanna move the mouse, you gotta move the cheese,” is how he once put it.

So why would Newsom be upset that gasoline prices are spiking to European levels in his state, rather than celebrating it as a victory in his war against climate change?

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