Schwarzenegger orders regulators to accelerate an investigation into a recent ‘unique spike’ in the state’s fuel market.
The Los Angeles Times
SACRAMENTO, CA — Gov. Arnold Schwarzenegger ordered regulators Thursday to intensify an investigation into why gasoline prices in California rose much faster and much higher than those paid by other U.S. motorists this spring.
Preliminary findings released by the California Energy Commission indicated that the usual 19-cent premium in spot prices here compared to the New York spot market jumped to more than 60 cents between April 18 and May 9. That cost Californians an estimated $108 million more than was paid by Atlantic seaboard residents during that period, the report found.
The average pump price in Los Angeles leaped to an all-time high of $3.428
for a gallon of self-serve regular gasoline May 8 while New Yorkers were paying
$2.997 a gallon, Energy Department records show. Only part of the increase could
be attributed to rising crude oil prices and seasonal reasons, the California
commission said, adding that it needed more data to figure it out.
“The California market saw a unique spike,” Schwarzenegger said. “We will get to the bottom of it and will take appropriate corrective action.” He directed the commission to pick up the pace of its investigation and give him a final report Aug. 15, six weeks earlier than previously scheduled.
Schwarzenegger cautioned that “it’s not that clear yet” whether the investigation would uncover any instances of illegal price gouging by oil refiners, which have been enjoying whopping profits.
The oil industry called the Energy Commission report old news and said it had nothing to hide.
“This industry has been investigated time and time again,” said Tupper Hull, a spokesman for the Western States Petroleum Assn., a trade group representing oil producers and refiners. “There’s never been a finding of anything improper and illegal.”
Refiners are confident that the latest probe will show that regional “market dynamics” account for California’s greater price volatility, Hull said. In California, those factors include higher taxes, tight supplies and strict specifications for cleaner-burning fuels, he said.
Tom Dresslar, a spokesman for California Atty. Gen. Bill Lockyer, conceded that gasoline prices and profit margins for refiners generally are higher in California than in the rest of the country.
Nevertheless, the price surge this spring boosted the margin between an average refiner’s cost and the price charged to filling-station operators by 134% during the first four months of the year, Dresslar said. Meanwhile, the cost of buying crude oil rose 14%, he said.
Lockyer, who is working with the Schwarzenegger administration on the price investigation, has subpoenaed documents from oil companies and will be taking depositions from executives as part of an independent probe.
Lockyer, along with Assembly Speaker Fabian Nunez (D-Los Angeles), is backing legislation that would prevent price gouging by oil companies as well as the service-station operators covered by current law. The bill would give prosecutors greater power to investigate oil refiners and wholesalers when pump prices rise much faster than the cost of crude oil.
Consumer activist Jamie Court said state officials needed to act, not study.
“You cannot find out if there’s price gouging, unless there is a law against price gouging, and there’s none except during states of emergency,” said Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “The governor just wants to appear tough on oil companies with the public, but until he gets behind modernization of the state’s price-gouging laws, he has no stick to swing at the oil companies even if he wanted to.”
