California lawmakers ask AG to investigate "mystery surcharge" in gasoline prices
I knew it! There was something screwy about the gasoline prices here in California, even with the taxes we pay an absurdly high rate compared to other states!
SACRAMENTO — Since at least 2015, Californians have been paying a “mystery surcharge” on gasoline that adds roughly 20 cents to each gallon — costing drivers more than $17 billion — and now a coalition of lawmakers is asking the attorney general to find out why.
A group of 19 legislators, including a dozen from the Bay Area, sent a letter Monday requesting the state’s Department of Justice to investigate the hidden charge identified in a 2017 report on the state’s high gasoline prices.
Golden State drivers regularly pay some of the highest gasoline prices in the nation, which fluctuate weekly but that typically rank in the top two or three. This week, however, California has the distinction of the highest prices, at $3.25 per gallon, or a dollar more than the national average, according to AAA.
High taxes are not entirely to blame, says UC Berkeley economist Severin Borenstein, a lead author of the report. Even with California’s recently increased gas tax, which voters upheld this past November, the state still ranks second in total taxes, paying approximately 73 cents per gallon, compared to Pennsylvania’s 77 cents, according to the American Petroleum Institute.
There are other factors contributing to higher-than-average prices, too, Borenstein told this news organization in 2017. Among them are cleaner-burning and low-carbon fuel requirements that together contribute another 14 cents. The state’s cap-and-trade program adds another 12 cents.
But motorists are still paying 20 cents more for each gallon of gasoline than they should, Borenstein said. And, the mysterious part is that the surcharge showed up just a few months after the researchers started their work.
The California Energy Commission in late 2014 tasked Borenstein and four other experts to form the Petroleum Market Advisory Committee to study the state’s high gas prices. Not too long after the team started working, an explosion in February 2015 at Exxon Mobil’s refinery in Torrance caused a major disruption in the state’s oil market, causing prices to spike while the refinery was shut down.
The committee expected prices to rise, which is traditionally what happens when there’s a sudden shortage. But instead of prices coming down when the refinery got back online, they stayed high, he said. And they still haven’t dropped to what the committee would have expected.
That could be because refineries are colluding to pocket the extra profit, or it could be some other issues limiting production and driving up prices, he said. What the committee did conclude, according to the legislators’ letter, is that the surcharge shows up “between the refineries and our gas tanks, in the distribution and retailing network.”
https://www.paradisepost.com/2019/01/29/a-20-cent-mystery-surcharge-on-gas-california-lawmakers-ask-ag-to-find-out-why/
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