Group Urges Senate Leader to Resist Oil Companies, Take a Stand for Full Passage

Santa Monica, CA — The California Assembly took a small step toward reining in gasoline prices today, passing two small but consumer-friendly bills to oversee the oil and refinery business. The bills face a tough battle in the Senate, said the Foundation for Taxpayer and Consumer Rights, urging Senate leader Don Perata to come out forcefully in favor of the bills and bring them speedily to a vote.

“Oil companies and refiners, which have perfected the art of making more money by making less gasoline, are marshaling their forces to stop even modest public scrutiny of how they reap their record profits,” said Judy Dugan, research director of FTCR and a founder of its OilWatchdog.org project. “Senator Perata needs to make it clear that the oversight of refinery operations and finances in these bills is the minimum that the Legislature should do to protect Californians from the next round of $3.50 or $4.00 gasoline.”

Sources indicate that Gov. Arnold Schwarzenegger, who has taken $4 million in oil company contributions, opposes the measures, said FTCR. He will be pushing the Senate to kill them before they reach his desk. In a preview of the fight to come, Assemblywoman Audra Strickland called the bills a ‘Communist command and control’ scheme. “We thought that kind of rhetorical bomb left political debate along with Joe McCarthy 50 years ago,” said Dugan.

The bills are:

AB1610, by Assembly Speaker Fabian Nuñez and Assemblyman Mike Eng. Authorizes state energy and air quality officials to obtain information on causes and duration of refinery outages and to request staggering of routine maintenance to prevent supply shortages and gasoline price spikes. Allows inspections of refineries.

AB1552, by Assemblyman Mike Feuer. Requires more detailed reporting to state energy officials of refiner operations including costs, profits, supplies on hand and market activity. Eases attorney general investigations of possible supply and price manipulation, though state authority to investigate price gouging at refinery level is lacking. (A bill by Nunez to extend gouging laws to the refinery level was introduced but killed without an Assembly vote last year.)

The package of bills shepherded by Nuñez includes a third bill, AB868 by Assemblyman Mike Davis, which has already been weakened to uselessness. Californians currently lose up to a three cents a gallon on their fuel purchases because gasoline expands as it grows warmer. The average gasoline temperature in California is 75 degrees, but it is sold to consumers as though it were a more compact 60 degrees. An honest sale would measure the temperature of the gasoline as it entered the tank, as is already the rule in Canada, or sell it at the average temperature, as in Hawaii. Unfortunately, Davis’ bill follows the industry line by calling for two years of unnecessary study and debate before any action is even proposed.

FTCR noted that Californians are still paying more than $3 a gallon for gasoline, and even the federal Energy Information Administration predicts a new round of price spikes during the summer driving season because refineries are running well below capacity.

“Refiners have refused for two decades to keep up with the growth of population and demand, and now they apparently can’t keep the refineries they still have up and running,” said Dugan. “If these shortages are not deliberate, then the oil companies and their refiners must be incompetent. The bills by Nuñez and Feuer will at least give us some answers.”

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The Foundation for Taxpayer and Consumer Rights is a leading nonprofit and nonpartisan consumer watchdog group. For more information visit us on the web at: www.ConsumerWatchdog.org and www.OilWatchdog.org.