Hope you all had a good end of March - I’ve had a busy one, including finishing off this story for Floodlight and The Guardian (which I’ll get into more next week).
A reminder that at the end of the month, paying members of The Planet You Save get a bonus edition with first access to a very-low-impact reading club (not a whole book! no set meeting time! Just a chance to sample a good climate change read alongside comments with yours truly and fellow readers.)
So far we’ve read selections from Generation Dread: Finding Purpose in the Climate Crisis, The World as We Knew It and Field Notes from a Catastrophe. If you want to take a peek, you can download the Threadable app (iOS only, sorry) and go directly to The Planet You Save circle by clicking here .
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Lots of good links at the end this week, but first let’s go back to Cali…
(Gas prices in remote Ludlow, California, March '22. I regularly saw similar prices in the Bay Area later that summer)
California is a state of extremes. I will admit to having bought into state’s bizarro exceptionalism, in neutral way. Whether you think for good or bad, California is absolutely its own thing.
And that’s true when it comes to cars, gas prices, emissions policy and now, a new gas price-gouging law. California is not any closer to breaking its deep and widely held car dependency, so it’s decided to focus on making them less polluting. The state’s auto emissions standards have effectively driven the rest of the country’s for decades. It was the first state to announce a future without new gas car sales - although at the time, there weren’t a lot of details as to how.
When gas prices spiked last summer, they were even higher in California. California’s high gas tax and emissions standards certainly increased the amount per gallon at the pump, but for almost a decade, the math doesn't add up when comparing the size of the difference between California and the rest of the country:
UC Berkeley energy economist Severin Borenstein was the first to identify what he dubbed the “mystery gas surcharge” that developed after a 2015 explosion at the Exxon Mobil refinery in Torrance. The resulting fire was extinguished, the refinery was repaired and fuel supplies eventually returned to normal. And yet, Californians continued to pay more than motorists in any other state…
Borenstein says the surcharge can’t be explained by taxes, fees or the higher costs of the cleaner fuel the state requires in the summer to reduce smog. There also have been data showing the surcharge is higher at branded stations.
California politicians have pointed the finger at oil companies, saying the mystery surcharge is just deliberate price gouging. But there’s been little movement over the years to turn that accusation into legislation. Despite state environmental bonafides, the state’s politics are still oil-heavy. In 2021, it was 7th largest crude oil producing state, exporting part of that production outside of California. Production and refinery companies still hold notable sway in state politics, especially in the central part of the state.
How did California end up with a gas price gouging law then? It started last year when Gov. Newsom announced he’d be seeking a special legislative session to pass a windfall tax on excessive oil company profits. (2022 was an absolute banner year of profits for oil majors. But legislators and even the mystery surcharge expert himself were skeptical such a move, as satisfying as it sounded, would actually lower gas prices in California:
State Sen. Dave Min (D-Costa Mesa) said he has concerns about the governor’s proposal and didn’t see any “smoking guns” at the hearing. But he also said the state’s petroleum market is broken if the industry is able to earn record profits while Californians pay “ridiculously high” gas prices.
“We have to fix it and I do think we need answers and accountability here because I don’t know where the blame lies,” Min said.
So instead, Newsom and California legislators decided instead to get more information in search of said smoking gun, with a series of amendments added in late March, Calmatters reports:
The compromise… shifts the process to state regulators. Oil refiners will be required to report additional data about their operations and a new watchdog division of the California Energy Commission will investigate alleged price gouging by the industry. That could inform the commission to establish a profit threshold above which companies would be assessed a financial penalty, though the rule-making process is merely authorized by the new law, not mandated.
The energy commission gets more data from oil companies (including subpoena power to do so), then it’s up to them, in theory, to decide what counts as price gouging and impose a penalty. Proponents of the law suggested just the action of forcing companies to provide more data about what goes into their pricing would drive down gas prices
“If we force folks to turn over this information, I actually don’t believe we’ll ever need a penalty because the fact that they have to tell us what’s going on will stop them from gouging our consumers,” Rebecca Bauer-Kahan, a Democratic state representative from Orinda, told the AP.
Crucially though, that data will not be public, remaining confidential to the energy commission and any relevant experts brought in to investigate. Despite that assurance, lobbyists for oil company have suggested they will sue if they think what the energy commission wants goes too far.
While California seeks to punish oil companies for future gouging, the economics of gas in California could get increasingly weird. Almost 20% of all car sales in the state last year were electric (compared with nearly 6% in the wider US). As that increases, gas prices will begin to partially untangle themselves from some Californians’ cost of living (not entirely though, given transportation of goods). While the state has pushed for wider EV adoption in lower and middle-income households, the electric car is still largely a purchase of rich, home-owning Californians. Meanwhile, gas prices are likely to rise in general again this summer as OPEC cuts back on production. Who pays how much for gas in California in 2030? All the energy transitions will be bumpy, but this one could be particularly so.