“We are fast approaching the stage where the government is free to do anything it pleases, while the citizens may act only by permission.” (Ayn Rand)
“What the bill is really about is giving more artificial advantage to electric vehicles over the internal combustion engine. Higher the prices, the better, while deflecting the blame to Big Oil.”
When it comes to energy, the California government has termite aspirations. Having wounded its electricity grid with centrally planned wind and solar reliance, the state is legislating vile-and-spite toward the mainstays of the transportation sector: gasoline and diesel.
Consumer preference for the most affordable, plentiful, dependable energies? No standing in this state. Taxpayer neutrality? Absent. Government knows best, with today’s intervention adding to the issues created by prior intervention.
Already, taxes and other mandates have made the Golden State’s pump prices the highest in the country: $4.83/gallon, almost 40 percent higher than the national average. A $0.54/gallon state tax for gasoline ($0.41 for diesel) is just the start of the burden, with CO2-related taxes and other fees raising the non-market burden to around $1.00/gallon. Add the invisible tax of hampered oil production and refining in the state, and the causality behind the differential is all but complete.
New Law
Applicable to “major oil producers, refiners, marketers, oil transporters, and oil storers,” Senate Bill No. 2 (Bx1-2), 12,880 words long, would authorize the California Energy Commission to:
set a maximum gross gasoline refining margin … [and if so] to establish a penalty for exceeding the maximum gross gasoline refining margin…. [and] petition the court to enjoin a refiner….
The bill would also:
expand the scope of the crime of perjury, thereby imposing a state-mandated local program… [and] establish the Division of Petroleum Market Oversight … [and] establish the Independent Consumer Fuels Advisory Committee …. to advise the commission and the division.
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“California Took on Big Oil and Won,” proclaims the latest press release from Gavin Newsom, Governor of California.
Today, surrounded by legislators and community leaders in the rotunda of the California State Capitol, Governor Gavin Newsom signed legislation to implement the strongest state-level oversight and accountability measures on Big Oil in the nation – bringing transparency to California’s oil and gas industry, shining new light on the corporations that have for decades operated in the shadows while ripping families off and raking in record profits.
It is back to the crude populist rhetoric of Jimmy Carter during the 1970s energy crisis. The press release mentions “putting profits over people.” But if this were really true, Newsom and the state legislature would put people over politics by rolling back the government premium of about one-third of the pump price.
What the “price gouging” bill is really about it giving more artificial advantage to electric vehicles over the internal combustion engine. The higher the prices, the better, while deflecting the blame to Big Oil.
Translated, California’s oil industry—every party that touches the oil—is now potentially guilty for simple market-clearing pricing, and subject to the vague CEC powers to subpoena, investigate, bully, and file suit against.
Legal costs and uncertainty will discourage investment and add new costs to oil provision, increasing pump prices and deteriorating service. And to the extent that private parties are spooked to keep prices below market levels, physical shortages and lines at the pump can be expected.
Conclusion
“We are fast approaching the stage,” commented a free-market philosopher, “where the government is free to do anything it pleases, while the citizens may act only by permission.” California is there with other states in pursuit.
It is time to reverse course, beginning with the majority political class in the state. As the Wall Street Journal noted, California officials “should look in the mirror and consider the burden of regulation.” The war against energy affordability must end.