Column by Tom Elias, VENTURA COUNTY STAR
August 23, 2022
The cheating, price-gouging refiners who produce most California gasoline have won another round. Average prices per gallon have fallen below $5.50 and there’s less anger at the pumps now than a few months ago, when the tab leaped almost $2 per gallon overnight. Now if you hear any talk while parked at the pump, it’s mostly grousing, not outright fury.
This is the same tactic the oil companies have used repeatedly since the first gasoline crunch hit America in the 1970s, when Arab and other oil-producing countries embargoed oil coming here, supplies were rationed and prices soared above $2 for the first time.
They fell back a bit when the embargo was lifted, and consumers eventually accepted the new, higher levels as normal.
Pleased with that outcome, oil companies used the tactic over and over in the ensuing decades, claiming supply shortages or refinery outages or natural disasters forced them to lift prices. After each rise, pump prices fell back a bit and drivers came to accept the new levels.
That’s been the sequence this time, too, as the cartel-like oil companies followed their script to new extremes, using America’s boycott of Russian oil (less than 3% of U.S. supplies) as an excuse.
How can we tell we are being gouged? Just look at the record profit increase of $14 billion piled up by this state’s five major refiners — Chevron, Marathon, Valero, PBF Energy and Phillips 66 — in the first and second quarters of this year. Their overall profits are at all-time highs, so they must also be setting records in per-gallon profits even though refiners never willingly reveal those margins.
That’s why it’s vital now for state legislators to pass and Gov. Gavin Newsom to sign a pending bill from Democratic state Sen. Ben Allen of Santa Monica that forces refiners to report monthly to the state Energy Commission how much profit they make on each gallon of gas.
“To protect consumers, more information about California refinery operations needs to be made public so that (we can) monitor and hold the market accountable,” said Jamie Court, president of the Consumer Watchdog advocacy group.
In short, if this bill (SB 1322) passes, consumers could tell when they’re being gouged and cheated, rather than being mere victims of circumstance.
The logic of this is clear: Each time a wildfire or other natural disaster strikes in this state, the attorney general warns merchants in affected areas it is illegal to gouge by raising prices much over normal levels even when supplies of various goods might be hard to find or deliver.
If that’s sound public policy in fire zones, why wouldn’t it be just as solid California-wide in other unusual circumstances like the current war in Ukraine?
If and when refiners begin reporting their profits per gallon regularly, the Legislature should next define what is an excess profit on gasoline and then tax the difference between excess profits and acceptable levels.
Anything less would amount to sanctioning price gouging and favoritism of oil companies over their customers, and far more visibly than, for example, utility companies are now favored over their customers.
In both cases, consumers must pay the going rate, however high, or suffer extreme consequences. That’s really no different from a tax.
Many Californians habitually blame gasoline taxes for the fact that pump prices here are nearly the highest in the nation. But the oil companies’ hugely increased profits as the price of gasoline rose this year suggest it’s a lot more than that. In fact, California taxes differ from the national norm by about 60 cents per gallon, while prices here are usually about $1.30 higher than elsewhere. So taxes account for less than half the difference between California costs and those in other states.
This has all persisted far longer than a generation and it’s high time someone did something to curtail it. The Allen bill is a small step in the right direction, but one that must be taken before Californians stand any chance of getting price relief.
Email Thomas Elias at [email protected].