California Energy Commission to investigate cause of high gas prices

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California Energy Commission to investigate cause of high gas prices

PHOTO BY BRENDON LOY/CREATIVE COMMONS

PHOTO BY BRENDON LOY/CREATIVE COMMONS

PHOTO BY BRENDON LOY/CREATIVE COMMONS

By Shoib Ahmadzai, CONTRIBUTOR

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The California Energy Commission is expected to deliver their analysis from their ongoing investigation to discover why gas prices are so high in the state next week on May 15.
As gas prices continue increasing well over $4 throughout California with no end in sight, Governor Gavin Newsom tasked the Energy Commission on April 23 to discover an explanation for the high gasoline prices, according to Newsom’s letter to the Commission.
Newsom suspects that “inappropriate industry practices” are causing the soaring gas prices in the state, he further states in his letter.
While prices continue to soar, California hit a record high in average gas prices during April not seen since 2014, according to a AAA news release.
The average price for regular fuel in California is currently listed at about $4.10 as of May 8, only a cent away from the highest average recorded price in the United States at $4.11, according to AAA.
The current national average for regular gas prices is about $2.88 as of May 8, AAA further reported.
California residents pay the highest for gas in the country while Bay Area residents pay among the highest in the state, according to the Boston-based company, GasBuddy, a company that tracks real-time gas prices.
As the California Energy Commission investigates what is causing the state to have such high gasoline prices, one analyst believes it has to do with a “mystery surcharge.”
Severin Borenstein, a University of California, Berkeley professor for the Haas School of Business, explains that the increase in fuel cannot be blamed by taxes alone, “after taking out the differences in price that’s not explained by the government taxes and environmental programs,” Borenstein explained to The Pioneer in an interview.
Borenstein, who is a former chair of the Petroleum Market Advisory Committee (PMAC) to the California Energy Commission, also explained that the increase in fuel cannot be blamed on emissions trading, the state’s low carbon fuel standard, or the use of cleaner-burning gasoline.
Since 2015, the difference in gasoline prices reached new heights in California compared to other states as it grew substantially, with an unexplained difference ranging up to 25 to 30 percent.
Additionally, the PMAC’s final report, published in 2017, brought attention to an “unexplained price premium that has hit Californians since mid-February 2015, amounting to $12 billion in excess payments,” Borenstein highlighted in a post from the UC Berkeley blog.
California residents have been paying $20 billion for fuel since the surcharge, according to Borenstein. None of this money has gone to the government, but rather gasoline sellers, he further stated.
“I don’t know [when it will end] because I don’t know what the cause is and that’s why I think we need an investigation with serious resources because if it’s costing California $4 or $5 billion every year, spending $4 or $5 million to figure out what’s going on seems like a good investment,” Borenstein told The Pioneer.
Despite claims of “bad industry practices” and “mystery surcharges” contributing to the high gas prices within the state, others are not convinced.
Many quickly point to California’s gas taxes as the root of the issue.
“California wants to think it’s a ‘mystery surcharge’ when really it’s just a California problem: special type of gasoline, environmental (regulations)/policy, taxes, and a lack of interconnectedness with the rest of the country,” tweeted Patrick DeHaan, head of petroleum analysis at GasBuddy.
President Donald Trump also tweeted on the matter on April 26, indicating that California’s gas taxes are to blame.
Gas taxes are one of the contributing factors that put California’s gas prices above other states. As of Jan. 2019, California had the second highest taxes on gas, listed at 55.5 cents per gallon, according to USA Today.
In addition, California imposes a sales tax on gasoline at 2.25 percent, as well as a state excise tax, adding .417 cents per gallon, according to the California Department of Tax and Fee Administration. An increase to .473 cents to the state excise tax will be implemented this July.
There was a chance for lowering gas taxes in California in the November 2018 general elections, through Proposition 6. The measure would have repealed Senate Bill 1, a fuel tax known as the Road Repair and Accountability Act, which ultimately would lower gas taxes.
Proposition 6 failed however, as 57 percent of voters opposed it.
As gas prices continue increasing, the spike has certainly affected many students at California State University, East Bay.
“I think it’s crazy that gas is going up, but I also understand it’s a limited commodity,” said senior Lindsey Lomas, a Hayward resident.
“Gas prices are definitely taking a toll on my wallet. The Shell gas station by my house was $4.28 a liter last time I saw it,” claimed James Gorospe, a junior who commutes from Martinez. “I’m now mainly using BART because it’s cheaper than filling up every week and a half.”