Since California gas prices are tipping $5 again, it’s time for the latest oil industry boosters in the media to claim it’s government’s fault, not the oil refiners. The latest article in Forbes claims it’s not price gouging, but taxes and environmental policy driving prices at the pump. The article cites a dubious study by Michael Mische that defies all the public research done in the last few years about California’s woes.
Mische showed up in the legislature on the oil industry’s guest list to try unsuccessfully to stop the Governor Newsom’s special session reforms for greatest transparency and accountability for oil refiners in 2023. Those reforms produced definitive evidence showing that price gouging – excessive profit taking – by oil refiners is why Californians paid as much as $2.50 more per gallon at the pump than US drivers in 2023.
Mische’s resume at the time showed his consulting firm’s clients included the Kingdom Of Saudia Arabia and his ties to the petro-state included these accolades:
“Kingdom of Saudi Arabia. Appointed Senior Advisor to the Saudi Public Investment Fund (Taqnia), a $500 billion investment fund, 2018 to Present.
Kingdom of Saudi Arabia. Lead Consultant for the design and implementation of co-innovation and co-investment processes and organization capable of supporting 14 different economic sectors and over $300 billion in AUM, 2020 to Present.
Kingdom of Saudi Arabia. Lead Advisor for the development of the strategic plan for the “Innovation Super Highway” Of Vision 2030. 2018 to Present. ”
When I look for independent thinking on gas prices, I tend not to look to associates of Crown Prince MBS.
That might explain why Mische’s math is so bad. Forbes writes, “According to the study…California levies the highest gasoline taxes and regulatory fees in the nation—around $1.64 per gallon. By comparison, refiners typically make far less per gallon, often just pennies.”
Since 2023, California required oil refiners to publish how much gross profits they make per gallon thanks to SB 1322, authored by Senator Ben Allen and sponsored by Consumer Watchdog. The public reporting shows the refiners made more than $1 per gallon on average in 2023, and their profits only shrunk in 2024 after the implementation of the special session reforms. By comparison, Californians spend about 70 cents more per gallon in added state taxes and environmental costs, which are all well documented. These cost pays for our roads, why is we have “freeways” rather than highways, and our cleaner air. By contrast, the oil refiners’ profits goes right into their pockets.
The Division Of Petroleum Market Oversight (DPMO), created out of the special session reforms of 2023, has done extensive research showing that it is refiners’ behavior of letting their inventories run too low and failing to resupply that caused the price spikes of 2022 and 2023. The DPMO also produced a Consumer Alert in February showing the same pattern driving gas prices up now.
The current price spike is the result of a Northern California refinery, run by PBF, going off line in February and the refiner not resupplying the market. Because the Energy Commission has not posted refining margins for 2025, despite the clear mandate to do so under SB 1322, we don’t know the refiners’ margins – but one can bet they have spiked since February.
Refiners are creating the conditions by which Californians are now paying $1.47 more gallon at the pump than US motorists. Every dime over 70 cents more is what we call the “Golden State Gouge,” added profit for the four refiners than now control 90 percent of the refining in the state above what refiners are making in other states.
If the government is to be blamed, it is for not acting decisively enough. It’s not just the failure to post refining profits in the two month window the law requires. The California Energy Commission was supposed to develop a penalty for price gouging by this summer, but it instead has punted on the rule until 2026. This gives the refiners a license to steal this year without consequences.
