We should anticipate black and gray markets in fuel, now that the Legislature has approved a cap-and-trade gasoline tax increase, estimated by the Legislative Analyst’s Office as much as 73 cents a gallon, plus the 12-cent increase from the gas-tax hike passed earlier this year.
A gray market is legal, but not officially sanctioned. The black market already is here.
“Organized crime gangs are buying hundreds or thousands of gallons of diesel fuel, and reselling them to make an untraceable profit,” NPR reported in 2014. Such crime is prevalent, Glendale police Officer Dan Suttles told the network.
In April 2012, then-Los Angeles Controller Wendy Gruel reported $7 million in missing city gasoline. That led a reader to contact the police about a city gardener, who later was arrested for allegedly selling thousands of dollars of city-owned gasoline on the black market, the Los Angeles Times reported.
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One can’t predict how much gas and diesel thefts could rise, but the tax increase coming in November may give an indication of what will happen when the new cap-and trade tax takes effect.
April’s $2 boost to the price of a pack of cigarettes changed behaviors. An LAO report noted that in the two months before the tax increase took effect, tobacco tax revenue ran 24 percent and 37 percent above 2016 levels.
But the extra revenue was quickly snuffed out. The May 2017 cigarette tax revenues dropped 64 percent from May 2016. According to the report, some cigarettes could be coming from states with taxes lower than California’s.
Crime has been getting worse since Jerry Brown was elected governor. The Bee reported, three-quarters of California’s largest cities saw violent crime rise in 2015, with Sacramento’s up 25 percent.
When fuel is contraband, the perpetrator makes a quick profit and pays no cap-and-trade or other taxes of any kind. Before the gasoline tax hike comes on Nov. 1, I would recommend buying a lock for your gas tank.
Sen. John Moorlach, R-Costa Mesa, can be contacted at firstname.lastname@example.org.