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Californians Pay $10 Million a Day More Than They Should for Gas



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Everyone knows that gas is expensive in California.

The reasons, we are told, include high state taxes, costly special blends and fees aimed at helping the environment.

But San Diego Union-Tribune reporter Rob Nikolewski writes that Californians also pay far more than they should for reasons that no one has publicly identified.

Writes Nikolewski: “UC Berkeley professor Severin Borenstein calls the price differential ‘California’s mystery gasoline surcharge’ that roughly translates into a premium of 20 to 30 cents on every gallon pumped in the state.”

Mystery Surcharge Totals $3 Billion to $4 Billion Annually

Given that Californians put 40 million gallons into their vehicles daily, that mysterious surcharge quickly becomes a whopping number. Borenstein puts the unaccounted-for-costs at between $3 billion and $4 billion annually. That works out to about $10 million a day.

Somebody ought to fix this, right?

Nikolewski reports that the state’s Petroleum Market Advisory Committee “looked into the price discrepancy and turned in its report to the California Energy Commission last fall.”

Reasons for High Prices Are Elusive

The problem is, the panel of five experts from the public and private sectors couldn’t identify why Californians pay too much for gas.

“Theories range from suspicions about gasoline refiners and marketers to criticisms that the state’s regulatory burdens have made California unfriendly to business but Borenstein says they are just that — theories,” reported Nikolewski.

“Borenstein is calling for the formation of a commission to find the exact reasons for the price differential.”

However, Jamie Court, president of Consumer Watchdog, points the finger at the refiners. It is estimated that Tesoro and Chevron total about half of the state’s refining capacity.

The “inside information” refiners “know about each others’ supplies and prices allow them to rig the market to keep gas supplies low, prices high, and drive out competition,” Court said.

But David Hackett, president of Stillwater Associates, a transportation energy consulting company in Irvine, told Nikolewski that the possible explanations are less sinister.

“I think it is a whole bunch of little things that have restricted competition,” Hackett said. “There’s not much competition at the pump in California these days as there used to be, or as there is in other parts of the country.”

Meanwhile, this is certain: Gas costs Californians a lot more than it should cost. And, at least for now, there’s nothing anyone can do about it.

You can read Nikolewski’s “The missing billions spent on gasoline in California each year” at this link.