CA Gov Supported Gas Tax Increase - Now Calls For Investigation of High Gas Prices

P. Gardner Goldsmith | April 29, 2019
Font Size

In a world where politicians come and go, it sure is reassuring to know that one thing about them is perennial: their capacity to engage in the fine “art” of grandstanding.

And among the many doing yeoman’s work in that area, California’s Governor, Gavin Newsom, appears to be quite adept. As Christian Britschgi reports for Reason, on Tuesday, April 23, Newsom made a public spectacle of his “concern” about a certain issue.

On Tuesday, the governor sent a letter to the California Energy Commission (CEC) asking that the state agency investigate the Golden State's roughly $4.03 per gallon gas prices, currently the highest in the country (and well above the national average of $2.86 per gallon).

"But wait," you say? Could there be more to the story than a white-collared political paladin pronouncing his displeasure at gas prices and promoting his devotion to the “little guy”?

Yes, there certainly could.

As Britschgi notes, this governor who is suddenly concerned about gas prices worked for years to increase prices for Californians trying to fuel their rides.

As lieutenant governor, Gavin Newsom supported a 2017 bill increasing the state's gas taxes. When running for governor in 2018, he opposed a ballot initiative that would have repealed that same increase.

Now, the courageous Newsom wants an “investigation”, and suspects that “inappropriate industry practices” might be playing a role.

No mention of the fact that the state itself imposes such high gas taxes, they’re almost the highest in the nation. As Britschgi notes:

California currently imposes the second-highest gas taxes in the country. A state excise tax currently adds $.417 per gallon, a rate that will increase to $.473 come July. On top of that, the state imposes a 2.25 percent gasoline sales tax.

And, to cap that off (pun intended), the state politicians recently imposed another cost on drivers.

California has adopted a low-carbon fuel standard and a cap-and-trade scheme for carbon emissions which together increase the state's gas prices by $.24 per gallon above the national average, according to a 2017 state government report.

So something rings particularly hollow when it comes to Newsom’s sudden conversion to consumer interests. Ditto for seventeen of nineteen California state legislators who voted in favor of the 2017 gas tax increase, but who sent a letter to the state Attorney General demanding that his Department of Justice investigate the sudden “unexplained gasoline surcharge” on drivers.

This is like carpenter ants nibbling away at the support beams of your porch, then complaining that your porch is unstable.

And it appears doubly notable when looking at the fact that numerous reporters and researchers have already done the checks that Newsom and his legislative pals claim are so dearly necessary.

As Britschgi observes:

Local media reports point to the twin effects of increasing demand and springtime maintenance at the state's refineries as contributing to the price hikes… The late March shutdown of a Valero refinery in the Bay Area added to the price hikes.  Something similar happened in 2015, when an explosion at the Torrance refinery in Los Angeles County caused the facility, then responsible for refining 10 percent of the state's gas, to close for over a year.

And with decreased supply while demand stays the same or increases, it’s difficult to bring those prices down when the federal government has hampered refinery construction and mandates different “mixes of gas”. In fact, as Britschgi notes:

Prior to that 2015 explosion, California's "gasoline price premium tracked closely with our higher taxes and production costs," wrote Severin Borenstein, a professor at University of California, Berkeley's Haas School of Business in a blog post.

And could there be other factors involved with the difference between the rise of gas prices in California relative to the rise in most other states? Sure.

But one thing is certain. By their words and deeds, politicians such as Governor Newsom show themselves to be less interested in really reducing gas prices than they are in grandstanding and not providing all the facts.

These are facts that trace directly back to them, and they should own up to their responsibility before they play at looking like heroes for the people.