Capitol Alert

Gas is getting more and more expensive. California lawmakers demand an investigation

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Increases to California's gas tax were approved in 2017 and will continue for years.
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Increases to California's gas tax were approved in 2017 and will continue for years.

California has the second highest fuel costs in the nation, with gas prices only rising in recent years.

A committee working on behalf of the California Energy Commission discovered an “unexplained surcharge” in September 2017 costing Californians over $17 billion since February 2015, or $1,700 for a family of four.

Now, nearly a year and a half later, lawmakers are taking notice.

Nineteen Democrats sent a letter to Attorney General Xavier Becerra earlier this week asking him to lead an investigation.

“There is a surcharge that began showing up between refineries and our gas tanks in the distribution and retailing network in California that began in California in 2015,” said Assemblyman Marc Levine, D-Greenbrae.

In the letter, Levine and his colleagues told Becerra the surcharge averaged 2 cents per gallon from 2000 to 2014 but soared in 2015 after the Torrance refinery fire. The cost spiked to an average of 24 cents a gallon in 2018.

UC Berkeley Professor Severin Borenstein chaired the Petroleum Market Advisory Committee, which authored the report for the state’s energy commission.

Borenstein said in the report that, even when accounting for California’s gasoline tax and greenhouse gas reduction costs, prices have “exhibited a continuous and unexplained differential compared to the rest of the country.”

A spokesperson for the Western States Petroleum Association said the rules of supply and demand set fuel prices.

“Over the past several decades, the petroleum industry on the West Coast has been subject to dozens of independent investigations by government agencies, all of which concluded the dynamics of supply and demand are responsible for movements in the price of gasoline and diesel fuel,” Kevin Slagle said. “In addition, many ever-changing factors, including the higher cost of producing ... gasoline (according to California Air Resources Board requirements) and state programs, such as cap-and-trade and the Low Carbon Fuel Standard, impact fluctuations in energy markets.”

The lawmakers cite lack of competition in the refinery market as a possible source of blame, but said in their letter to Becerra that “no one has been able to explain why these potential logistical issues would have persisted over the past four years.”

Levine said he has not yet heard back from Becerra on whether he would accept his request to launch an investigation. A spokesperson for Becerra said in a statement that the attorney general would not confirm or deny whether there is a potential or ongoing investigation.

Still, his office pointed to Becerra’s record of holding the oil industry accountable. For instance, Becerra in 2017 filed a lawsuit that prevented Valero Energy Corporation from acquiring a Texas-based fuel pipeline company. Becerra argued the acquisition would have reduced competition and raised gas prices in Northern California.

Though Levine acknowledged it is too early to make judgments about whether any market participants acted illegally by violating antitust rules, he didn’t hesitate to offer his critiques.

“The oil industry will say, ‘The gas tax is making your costs of fuel more expensive. The seasonal blend makes the cost of fuel more expenseive,’” Levine said. “But that has masked the robbery that the oil industry is engaged in from California families. ... Should we have paid more attention to this a year ago? You could say we could have.”

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