By Lance Simmens
According to a plethora of polling data, the price of gasoline is one of the most pressing existential issues facing American voters. This issue is particularly pronounced to those who live in California, where prices are highest in the nation. It is problematic from the
standpoint that its regressive application most assuredly penalizes the poorest in our society, especially given our reliance upon the automobile.
Thus, it is fair to question whether price gouging by major oil companies is occurring and if it can be proven state actions to curtail excessive pricing may be imposed. This issue is currently under review in Sacramento and if proven may provide much-needed relief to those filling their gas tanks with gas approaching $7 per gallon.
According to the California Energy Commission, fuel prices are so high for several reasons, including the state’s environmental regulations, taxes, and California’s unique self-reliance on refining its own gasoline.
Since the ‘90s, California has mandated that any gasoline sold in the Golden State be produced according to strict guidelines that reduce the gasoline’s overall emissions. As you might expect, California’s cleaner fuel blend is more expensive than the gasoline used by the rest of the nation.
Because of these regulations, more than 90 percent of gasoline used in California is refined in the state. So, if any of the state’s refineries experience unplanned outages or disruptions, those gas prices climb even higher, since the state can’t boost its gasoline supply by importing dirtier fuel that wasn’t refined according to its regulations.
Also, gas prices are high in California because there’s just less gasoline being refined in the state. In late 2022, California mandated that all cars, trucks, and SUVs sold in the state be zero-emission vehicles by 2035. Because of that, California’s refining industries are beginning to transition away from fossil fuels, according to The Hoover Institution, a public policy think tank at Stanford University.
Gasoline price changes in California are primarily driven by the cost of global crude oil and significant unplanned refinery outages. Currently, Russia’s invasion of Ukraine is causing crude oil prices to increase and remain volatile. Gasoline prices are highly sensitive, so any shift in supply and demand changes what you pay at the pump.
According to More Perfect Union, a progressive non-profit media organization, “Companies that produce oil were enjoying record profits when prices started soaring. And despite supply constraints, American oil companies didn’t want to increase production. That would mean building new rigs and drilling new wells, which is expensive. They were unwilling to make that investment and spend that initial money because it would cut into their profit margin … Oil companies are literally destroying our planet. They should be investing in transforming our energy sector so we’re not so reliant on carbon-emitting fossil fuels that are bringing our planet closer to 2 degrees of warming, which would be a mass extinction event. We need our energy sector to make this shift so we can literally survive. Greedy oil companies are not only forcing us to pay prices we can hardly afford, they’re jeopardizing our planet’s future as well.”
And while major oil companies like Exxon, Chevron, Shell, and BP maximized their record profits, they invested these windfalls in, you guessed it, stock buybacks. Exxon Mobil announced $30 billion in buybacks by the end of this year, Chevron $15 billion per year, instead of investing in research and development, infrastructure and technologies they opted for greed.
California is leading the pack in terms of gas prices at the pump. Enter Gov. Gavin Newsom, who earlier this year signed into law legislation that, according to the governor, will “implement the strongest state-level oversight and accountability measures on Big Oil in the nation-bringing transparency to California’s oil and gas industry, shining new light on the corporations that have for decades operated in the shadows while ripping families off and raking in record profits.”
Assemblymember Jacqui Irwin, who supported the legislation, remarked “not only will this new law provide real transparency and oversight with dedicated expertise to oversee the gasoline market, it will also create a plan to achieve our low carbon and clean air future.”
State Senator Ben Allen last year offered the Oil Refiner Price Disclosure Act, an attempt to reveal more information from the industry by requiring them to report each month on the cost of their crude, their wholesale prices, and their profits per gallon.
While there are efforts to get to the nub of the issue of high gas prices, the underlying imperative is to think in terms of impacts upon the world we are leaving for our children. This imperative stresses the need to stop if not reverse the deleterious impacts fossil fuels have on a world that is currently experiencing warming that is simply unsustainable. If we do not kick into overdrive to curb a warming planet we are doing an unimaginably destructive disservice to future generations. To quote a famous television advertisement from the 1970s, “you can pay me now or pay me later.”