Postcard from California: Governor targets oil companies over high gas prices

By Bill Walker

Last June, a Chevron station in downtown Los Angeles charged $8.05 for a gallon of regular gas. At another Chevron station In the coastal village of Mendocino, the price that month hit $9.60.

In a summer when US gas prices spiked to their highest level ever, those were extreme outliers, and they soon came down. But as they have for years, Californians continue to pay higher gas prices than in any other state except Hawaii.

This week, the statewide average was $4.75 a gallon, compared to the nationwide average of $3.39. At one point in October, even as global oil prices dropped, California’s average gas price surged to $2.60 more than the nation’s.

Some of the difference stems from the fact that state gas taxes are the highest in the US, and some from state rules for California’s special blend cleaner-burning fuel, which is more expensive to refine. But that leaves what University of California, Berkeley energy economist Severin Borenstein calls a “mystery gasoline surcharge” that can’t be fully explained by taxes and environmental regulations. He estimates that since 2015 the surcharge has cost California drivers $40 billion.

On Wednesday, lawmakers in Sacramento took up a proposal from Gov. Gavin Newsom that would make California the first state to fine oil companies for what he terms gas price gouging, and to return their excess profits to consumers.

In a video release promoting his plan, the Democratic governor declared: “Big Oil is ripping you off AND lying to you!”

“Big Oil’s been out there pushing the same old lies and myths to protect their record profits,” Newsom said. “Big Oil won’t say why they suddenly started charging Californians more than people in other states, but we know that resulted in record profits.”