California Governor Demands Investigation Into High Gas Prices

On Tuesday, California Governor Gavin Newsom responded to a new report claiming oil companies have been overcharging customers over social media.

“[California] drivers have paid an average of 30 cents more per gallon. There’s no identifiable evidence to justify that,” Newsom said. “I’m demanding an investigation. If oil companies are engaging in false advertising or price fixing — legal action should be taken.”

With California leading the charge against the federal government’s proposed fuel economy rollback, Newsom’s words are a bit of a faux pas. While we agree that companies should not be engaging in price fixing, California’s high fuel prices are largely its own doing. Newsom’s claims completely ignore this rather obvious fact — calling his ability to effectively negotiate the national fueling fracas into question.

We weren’t the only ones to notice, either. Twitter users immediately responded to the governor, with many acknowledging that Californians actually pay the highest gas taxes in the whole country (the state surpassed Pennsylvania this summer). Equally bizarre is Newsom’s outspoken support of the state’s 2017 gas tax increase and condemnation of 2018 ballot measure aimed at repealing it. He has to know that’s why fuel prices are so much higher there… right?

The California Energy Commission (CEC) report Newsom referenced was something he commissioned earlier in the year. The goal was to determine why Golden State residents were paying so much more for gas than people in other parts of the country. However, the CEC report determined “the primary cause of the residual price increase is simply that California’s retail gasoline outlets are charging higher prices than those in other states.”

It also outlined how much more Californians are being charged via regulatory measures and fuel taxes. The report estimated that California’s gas prices were $0.75 higher than anywhere else in the country last year, and over half of that appears to be directly attributable to the state’s taxes, low-carbon fuel requirements, and greenhouse cap-and-trade program. The West Coast, which is also subject to higher crude prices than other parts of the country, ran into supply problems this year as local refineries swapped over to special blends not used in other states.

While that doesn’t automatically exonerate Big Oil from the suspected price fixing, it also doesn’t support any accusations against them. Ultimately, this forced Newsom to kick the can down the road to Attorney General Xavier Becerra. The California Energy Commission did the same:

The CEC does not have any evidence that gasoline retailers fixed prices or engaged in false advertising. Moreover, the CEC lacks the expertise to determine whether such behavior occurred. The California Department of Justice is well equipped to conduct an appropriate investigation.

The whole thing is a little confusing. Newsom appears concerned with the high prices Californians have to pay at the pump but completely overlooks the core reasons for the problem. This offers plenty of ammunition to his political opponents in the gas war, especially with the Environmental Protection Agency repeatedly accusing the state of being mismanaged — and creating new ecological issues while failing to effectively address existing ones. At least, that’s how EPA Administrator Andrew Wheeler tells it.

At this point, we don’t expect either side to play fair and take anything at face value. Still, this will be a black eye for California, and it could have been avoided entirely if state leadership bothered to address why we need fuel taxes, or if it promised to tamp them down in the future. Instead, the governor responded to public complaints of high fuel prices by pointing the finger at Big Oil with no proof.

[Image: Michael Vi/Shutterstock]