Oct 19, 2022

Governor Newsom’s recent rhetoric on California gas prices hasn’t aged well.

“Greed and manipulation, that’s all this is,” he said.

CalMatters columnist Dan Walters couldn’t let that stand. The longtime statehouse journalist pushed back in his October 11 commentary:

“Newsom is only the latest governor to promise a crackdown on oil companies when pump prices spike. Over the years, there have been numerous investigations into why California’s prices are markedly higher than those of other states, but there’s never been any conclusive proof of collusion.

Rather, it’s been repeatedly demonstrated that California’s relatively high gas prices are largely, if not completely, explainable by unique factors such as the state’s particular refining recipe meant to minimize smog-producing emissions, its high taxes, and its overall high cost of doing business.”

Others joined the fact check chorus.

An energy markets expert from the University of Houston disputed the governor’s claims of price gouging, telling the Los Angeles Times:

“The real issue is you’ve lost several hundred thousand barrels a day of refining capacity. And to make up that supply, people are having to shift supplies from other parts of the nation, and that just costs money.”

Valero, a refinery operator in California and four other states, noted in a letter to the state’s Energy Commission that energy policies in the Golden State have created the conditions for price spikes at the pump.

The company wrote that “California policymakers have knowingly adopted policies with the expressed intent of eliminating the refinery sector” and explained in detail how “California is the most challenging market to serve in the United States” given its isolation, environmental requirements, and restrictions against increasing refinery capacity.

The letter put the blame for high gas prices on years of policymaker decisions, concluding:

“California cannot mandate a unique fuel that is not [readily available] outside of the West Coast and then burden or eliminate California refining capacity and expect to have robust fuel supplies.”

Valero also noted that claims of price manipulation haven’t stood up in court, pointing out how a federal judge “yet again” threw out a case alleging price conspiracies by the fuel industry, finding no basis for the allegations.

Separately, three energy experts who sat on the state’s Petroleum Market Advisory Committee in 2015 told the Los Angeles Times that the recent price spikes at the pump are due to poor planning by policymakers, not coordinated manipulation by oil companies.

One said the current crisis should serve as an “early warning” for officials, arguing simply: “The state has set aspirational goals for the energy transition, but it’s not very well planned.”

Severin Borenstein, the director of the Energy Institute at the University of California at Berkeley, agreed: “We’ve got to make longer-run plans and not just wait until the crisis is upon us.”

The third, Amy Myers Jaffe, a former executive director for energy and sustainability at UC Davis, said gas price volatility is the result of the state pushing to shut down its current energy infrastructure too quickly:

“Do I have the new infrastructure fast enough before I retire the old infrastructure, and what happens if you’re in the middle? … The way we’re doing it now is you just let the fuel costs go up and then we leave poor people with no ability to get anywhere. And then [politicians] grandstand against the oil companies — that’s not a solution.”

Governor Newsom could take responsibility for his failed energy policies, listen to the experts, and correct course. Instead, he’s scapegoating – and Californians are paying the price.

We need solutions, but right now it’s clear Newsom only cares about rhetoric.