A Very Bad Idea Gains Traction in California

Sorry for the editorialized headline but this is — according to people in a lot of important circles — a very, very bad idea, and one that is gaining traction in California.

Backed by California Governor Gavin Newsom, the California Senate has passed a bill that will punish oil companies for profiting when gas prices go up at the pump. His hope is that the California House will pass it soon and it can be signed into law by the end of this month.

This is a response to price jumps that hit a record high average of $6.44 last summer. In some places in California drivers had to pay $8. At the time Newsom asked the Legislature to put a tax on the profits of the five oil companies that provide 97% of California’s auto fuel.

That idea went nowhere.

Cooler heads in the Legislature knew that would lead to chaos at the pump and could cause oil companies to produce less gasoline. That — as you know — would lead to higher prices and not lower prices at the pump.

Stopped in his tracks, Newsom and some legislators came up with a new, “improved” idea. This bill gives the California Energy Commission the power to decide if gas producers are overcharging and — if they are — it can put civil penalties in place to punish the companies for their profits.

To do that, the Legislature needs to empower the commission to be able to open the books of those oil companies. This bill even gives the energy commission the power to subpoena executives to testify as to why prices are rising.

At the end of 10 years, the bill’s author, Sen. Nancy Skinner of Berkeley said, the Legislature will audit the program to see it if “really” works. If not, it can be shut down unless the Legislature decides to keep it.

The bill has opposition like Republican Sen. Kelly Seyarto.

“To sum it all up, it’s our energy policy – our energy policy and our efforts to replace fossil fuel with all electric in a very, very short amount of time,” Seyarto said. “Why can’t we just tell our constituents that? That’s why your gas prices are so high.”

A quick look at what’s happening reveals the real causes for really high gas prices in California is state taxes and fees, and draconian environmental regulations. The state has the second highest tax rate in the country at 54 cents a gallon. And oil companies are forced to blend gasoline in a special way not found anywhere else in the country.

Western States Petroleum Association spokesman, Kevin Slagle said the idea is bad for consumers and will — in reality — cause prices to be higher and not lower. He said the bill will require oil companies to file a report on 15,000 transactions a day.

Slagle called it a “ridiculous level of reporting” and noted — as we just did — that California’s high gas prices are caused by laws and regulations that hinder, and do not help, the production of gasoline.

“Why does the governor want to jam this through? Clearly it’s because the details of this are not good for California consumers,” Slagle said. “They don’t address the problem, but it provides him a political win.”

Source link: Insurance Journal — http://bit.ly/40FZrOI

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