Newsom Tries to Pass the Gas Price “Hot Potato”
Gov. Newsom is playing hot potato.
Starting to get heat from angry Californians about gas prices soaring past $4 per gallon, the Associated Press reports that he asked the California Energy Commission for a report on “why prices are higher than in the rest of the country, blaming potential ‘inappropriate industry prices’” for the sharp rise.
Newsom’s other villain is a hidden price increase or “mystery surcharge” – a concept coined by Severin Borenstein, a professor from the Energy Institute at UC Berkeley trying to account for the differential between what California pays and the rest of the country pays for gas.
But this rhetoric is nothing new. Liberal politicians have sought to pass the political hot potato of high gas prices for years, looking to set up someone – anyone – else as the culprit.
We don’t need an expensive government report to explain why gas prices have climbed past $4 per gallon. Newsom knows very well that taxes, regulations, and other misguided state government policies are largely why, according to AAA, we pay $1.17 per gallon more than the national average.
Over the years, in response to rising gas prices, liberal lawmakers have tarred oil companies as the villain, threatening a variety of punitive measures as they tried to pass the political hot potato, including a severance tax on oil production. Only in Sacramento would making gas production costlier be considered a good way to lower prices.
We can learn a lot from what happened in 2000, when gas prices in California hit (gasp!) $1.77 a gallon. At that time, legislative Democrats sounded a lot like Gov. Newsom in 2019, demanding studies and threatening oil companies with an “excess profits” tax. In May 2000, the Mercury News reported that then-Attorney General Bill Lockyer was prepared to “sue refiners over possible excessive profits, but he admits it will be difficult to prove in court.” Sound familiar?
A task force created at the time to explore the high cost of gasoline concluded, according to the Mercury News, that “there are several reasons for the price difference (between California and the rest of the country), but that they all come down to supply.”
That’s still one of the reasons why California gas prices are higher than the national average. According to the Daily Caller, in November, Colorado became the third state to surpass California in oil production in the past 2 years, joining New Mexico and Oklahoma in surpassing Golden State oil production.
Planned and unplanned maintenance at California refineries, also affect supply. Bloomberg News reports 2 refineries in Southern California and one in the Bay Area went down in the beginning of April.
Taxes are also a significant factor. As I wrote recently on Right by the Bay, Californians now pay 72.76 per gallon in total state and federal gas taxes – the second-highest rate in the nation. Gas taxes went up by 12 cents per gallon with the passage of Senate Bill 1, the $52 billion gas tax increase in November 2017, and they’ll go up another 5.6 cents per gallon in July.
We also pay about 28.5 cents per gallon in combined from big government energy policies enacted the Legislature – cap-and-trade and the low-carbon fuel standard. These are the real “hidden gas taxes.”
Gov. Newsom knows that Californians pay much more for gas than the rest of the country thanks to the big government energy policies he champions. If believes so strongly in his “climate change” agenda, then he should make the case why it’s a good thing that Californians are paying more for gas. By seeking to pass the hot potato, he sounds like just a typical politician concerned about their popularity falling.
Tim Anaya is the Pacific Research Institute’s communications director.