Gas Price Study Finds Nothing

Santa Monica, CA — A report ordered by Gov. Arnold Schwarzenegger on possible gas-price gouging came to nothing Thursday as the state’s energy commission declared it lacked enough corporate data to come to a conclusion. By putting off its final report until mid-August, almost the end of the summer driving season, the state fails consumers and lets oil companies off the hook, said the Foundation for Taxpayer and Consumer Rights.

“This issue has been studied to death,” said Jamie Court, president of the nonprofit, nonpartisan FTCR. “So the governor is sentencing Californians to a summer of record gasoline prices and oil company profits until he comes up with an action plan, not a study plan. He should immediately get behind legislation to allow oil companies to be prosecuted for price-gouging when their price increases don’t correlate with cost increases.”

See FTCR’s recent news release on price-gouging legislation, AB 457, sponsored by Atty. Gen. Bill Lockyer and Assembly Speaker Fabian Nuñez.

The oil industry has contributed $2.3 million in political support of Schwarzenegger.

The interim report stated the obvious: California suffered a much longer and steeper price rise than other states, at a cost to consumers of $132 million above the normal price of gasoline. The “why” remains a mystery only in the eyes of the governor and the energy commission. Even the agency’s own weekly reports show evidence of gasoline being excessively produced for other states’ markets, and of otherwise inexplicable drops in production, said FTCR.

Studies by FTCR have shown that very little of the price run-up could be due to the two chief cost variables, crude oil prices and state and local sales taxes. In addition, refineries in California keep lower gasoline supplies on hand, which keeps prices commensurately higher. Read the studies and previous releases.

“It’s a show of oil companies’ power over government that the California Energy Commission says it has no ability to compel regular reports by refiners on their costs of raw materials and production,” said Judy Dugan, research director of FTCR. “The interim report’s call for legislation to compel more refinery reporting is too little and too late.”

The commission said in its report that it can demand such information only on a one-time basis, which means it can’t do real-time analysis. “In any case, reports by individual companies are protected by the state as trade secrets, no matter how important they may be to a finding of profiteering,” said Dugan. “Even if the CEC does eventually find evidence of gouging, consumers will never know the details unless a criminal prosecution is pursued.”

The state’s oversight system is broken if it can’t provide basic consumer protection on such a necessary commodity, said FTCR.

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