Dan Walters

Opinion: Gas prices generate irrationality, demagoguery

There’s something about the ebb and flow of gasoline prices that makes ordinarily rational people go a little nuts.

And there’s something about politicians that entices them to demagogue the public’s irrational gas price obsession.

California’s gas prices have been particularly volatile in recent months, dropping from about $4 a gallon last year to about $2 in some areas as global oil prices plummeted, then rising to more than $3 in February and early March before beginning another downward drift.

Last month, a state Senate committee hearing was convened on the issue, and the two Democratic senators who ran it focused solely on the upward spike earlier in the year, ignoring downward trends before and after.

The two, Ben Hueso and Jim Beall, engaged in a little demagoguery, pointing the finger at those nasty old oil companies that are, they implied, colluding on prices.

They took their lead from a one-sided staff report and entertained Jamie Court, head of Consumer Watchdog, who railed, without much factual backup, against the oil industry.

This week, Court joined with Tom Steyer, the billionaire gadfly on energy matters who may run for governor in 2018, in a letter commending the Senate for the hearing, calling for a deeper investigation and demanding that consumers receive “a fair shake.”

Gas prices are higher in California than almost anywhere else in the nation, albeit markedly lower than they were a year ago. And there are reasons for that disparity.

California’s fuel taxes are among the highest in the nation, the state Air Resources Board just imposed cap-and-trade fees on fuel, and the state requires unique, smog-fighting formulations.

The state government’s leading expert on the fuel market, the Energy Commission’s Gordon Schremp, told the Senate committee last month that when one refinery was put out of commission by an explosion in February and another by a labor dispute, supplies tightened sharply, forcing refiners to acquire fuel elsewhere that could be reblended to meet California emissions standards.

The supply squeeze eased after a few weeks, and prices started to decline again.

Most of the remaining price disparity vis-à-vis other states, perhaps 75 cents a gallon, stems from California tax and formulation decrees.

Other than trying to raise his profile for political purposes, it’s difficult to understand why Steyer is complaining.

He is a vociferous advocate of reducing greenhouse gases and logically should want high prices to discourage driving and cut emissions. In fact, one price element – perhaps a dime a gallon – is the cap-and-trade fee imposed in the name of climate change.

Steyer also advocates imposing a tax on oil extraction in California that would push gas prices even higher.

When it comes to gas prices, irrationality reigns.

Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.

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