WHY WE NEED NEWSOM’S SPECIAL SESSION ON GAS PROFITS

 

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, OCTOBER 4, 2024 OR THEREAFTER

 

BY THOMAS D. ELIAS
      “WHY WE NEED NEWSOM’S SPECIAL SESSION ON GAS PROFITS”

 

        The gasoline price gouging that has plagued Californians sporadically for decades appears no longer to be merely occasional. Rather, it’s become pretty steady.

 

        Oil companies and refiners have so conditioned millions of California drivers that today’s prices, still well above national averages, now draw few complaints because they are about a buck lower than a few months ago.

 

        But the facts remain: Every time refiners allow their stocks to dwindle while blaming either in-plant accidents or routine maintenance, pump prices skyrocket and profits of the oil companies that own California’s Big 5 refineries rise to record or near-record levels.

 

        This means any slight disruption in supplies, intentional or not, resulting from collusion between the companies or not, produces huge margins for the companies. They include Chevron, Marathon, PBF, Phillips 66 and Valero, which together produce the vast bulk of gasoline consumed here.

 

        They also supply neighboring states like Nevada and Arizona, but consistently refuse to cut back out-of-state shipments when those shortages occur, putting virtually all the high-price burden on Californians.

 

        When state legislators refused to confront these realities during their regular session ending as September began, Gov. Gavin Newsom called them back into special session.

 

        The session was to start immediately, but the state Senate leadership refused to heed Newsom’s order and its members headed home for what was scheduled as a three-month break.

 

        Senators later relented, saying they would return to work if the state Assembly passes a steady-supply bill. Most senators are Democrats who campaigned in part as consumer advocates. Did Newsom get them to partially relent by hinting he might cut back some of their perks and staffing funds, or maybe some of their expense accounts, at next summer’s budget time?

 

        Said Newsom in calling the session, “It should be common sense for gas refineries to plan ahead and backfill supplies before they go down for maintenance, in order to avoid price spikes. But the price spikes are actually profit spikes for Big Oil, and they’re using the same old scare tactics to maintain the status quo.”

 

        Among the scare tactics: Some refiners threaten to reduce operations or even shut down parts of their facilities if the state imposes new rules requiring consistent on-hand reserves.

 

        For sure, special legislative sessions focused on just one subject can generate powerful momentum for change.

 

        It took a special session in early 2023 to get the Legislature to create a new Oversight Division in the state Energy Commission and force refiners to file monthly supply and profit margin information with it. The division has the power to set price limits, but has never exercised it.

 

        This may be one sign of the clout Big Oil still has in California politics, even though all the state’s big refineries are owned by out-of-state companies, now that Chevron is moving its head office to Texas.

 

        Newsom ordered this fall’s supposed special session, the first in modern history to be rejected by any part of the Legislature, after lawmakers refused to act on his proposal to require that refiners maintain stable gasoline inventories at all times. This is opposed by the governors of Arizona and Nevada, which get their gasoline from California and worry a high inventory here will make their supplies less certain.

 

        But it would be one step toward preventing sudden spikes like the $2 per gallon hike that hit California consumers suddenly in February 2023, but barely touched Nevada and Arizona.

 

        Another step could be having the new Energy Commission division use its authority to set a limit on profits. Some consumer advocates suggested a limit of 70 cents margin per gallon of gas, far below their take when price spikes occur.

 

        No one knows how long Newsom’s special session order will stay in effect; it might thrust legislators into a special session running concurrently with regular business once the lawmakers return to Sacramento in December.

 

        But the bottom line is clear: If California ever is to stop the constant cycle of sudden gasoline price spikes followed by record profits and then by a gradual lowering of prices – but never down to prior levels – there has to be action sometime. As the old saying goes, if not now, when? 

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net