Gas Price Relief Will Be Difficult

SACRAMENTO — Just how Gov. Gavin Newsom plans to make good on his promise this week to put money “back in the pockets” of Californians stung by the sharp rise in gas prices remains murky, but suspending or lowering the state’s highest-in-the-nation gas tax appears less and less likely.

The hesitation to tinker with California’s steep gasoline excise tax of 51 cents per gallon — even during an election year in which voters are feeling the pinch at the pump as prices continue to skyrocket amid Russia’s invasion of Ukraine — demonstrates just how politically sensitive the issue remains in a state known for its ribbons of freeways and worship of the automobile.

Though Newsom in his January budget proposal called for canceling an increase in California’s gas tax scheduled for July, his administration is also considering alternatives that could provide direct payments to residents.

The governor’s senior communications advisor, Anthony York, said Thursday that the administration is concerned that a cut in the state gas tax might not get passed along to drivers at the pump. The governor wants to ensure that any relief goes to Californians and is “not pocketed by the oil companies,” York said.

After Newsom vowed in his State of the State speech Tuesday to work with legislative leaders to provide Californians financial relief “to address rising gas costs,” senior advisor Dee Dee Myers also told reporters the rebates were likely to be sent to residents with vehicles and could cost the state billions of dollars. Administration officials have since backtracked on that, saying it was one of several options being explored by the governor.

Assembly Speaker Anthony Rendon (D-Lakewood) and Senate President Pro Tem Toni Atkins (D-San Diego) already signaled their opposition to lowering the gas tax, even temporarily, saying it would not provide substantial assistance and could reduce funding for critical road and bridge repairs statewide. They favor general tax relief to help Californians struggling with rising costs, not only for gas but food, rent and other life essentials.

Republicans are using the high gas prices to their political advantage.

Assembly Republican Leader James Gallagher of Yuba City has joined with other GOP lawmakers in calling for suspending all state gas taxes for six months, saying the state can afford to backfill funds for critical transportation projects with a portion of a massive state budget surplus that the Newsom administration estimates to be more than $45 billion.

“You’re telling me we can’t give this relief to consumers. One of the biggest things that they’re facing right now is the high cost of living, including gas, utility bills that are getting higher, rents, the cost of housing,” Gallagher said after hearing Newsom’s speech in Sacramento on Tuesday. “Something’s wrong. We’re not doing the things that we need to do to ensure that people’s costs are lowered.”

Gallagher said it would provide instant relief to Californians, particularly lower-income residents who are more likely to have long commutes to work.

In 2017, the Democratic-controlled Legislature passed Senate Bill 1, which then-Gov. Jerry Brown signed into law, levying the state’s first gas tax increase in 23 years to fix California’s roads and bridges in disrepair — 12 cents per gallon. Under the law, the tax increases each year on July 1 based on the growth in the California Consumer Price Index.

Last July, the tax increased from 50.5 cents per gallon to 51.1 cents per gallon. This upcoming July, it is scheduled to increase to 53.9 cents per gallon, according to the state Department of Finance. California’s total state taxes and other charges on gasoline are the highest in the country, according to the Tax Foundation, a conservative-leaning think tank based in Washington.

The state expects SB 1 to generate more than $5 billion annually during the first decade of its implementation. According to the Legislative Analyst’s Office, the state’s fuel taxes were expected to raise $8.8 billion in the 2021-22 fiscal year.

Still, state officials say that will fall far short of the amount needed to address all the shortcomings in the transportation system, which would total $117 billion over the next 10 years and includes $20 billion to address the impacts of rising sea levels.

Matt Rocco, a spokesman for the California Department of Transportation, said that with the gas tax still in place, the agency estimates it will have the $28.8 billion needed for the projects prioritized by the governor and Legislature in 2017, when the increase became law: pavement, bridges, drainage systems or culverts, and traffic congestion management systems.

Most of the state gas tax revenue supports state highway maintenance, rehabilitation and improvements, and nearly one-third goes directly to cities and counties.

The 2017 gas tax increase passed after a fierce debate in the Legislature, squeaking by in both the Assembly and Senate with the minimum votes required in both houses. Political turbulence followed closely.

In 2018, Republicans launched a successful recall effort against Orange County Democratic state Sen. Josh Newman, fueled by his vote in favor of the gas tax. Newman reclaimed his seat in 2020.

That same year, California voters rejected a statewide ballot measure, Proposition 6, to repeal the gas tax increase. The measure faced a barrage of opposition from trade unions, contractors, Democratic leaders and the California Chamber of Commerce, which said it “makes our bridges and roads less safe and jeopardizes public safety.”

“For decades, the gas tax was a toxic political football,” said state Sen. Scott Wiener (D-San Francisco). “We need to just leave the gas tax alone and focus on other forms of tax rebates or other supports for working families. We have the tools to do that.”

California Transportation Commission member Michele Martinez, who served for 12 years on the Santa Ana City Council, said the state’s gas tax system is worthy of review, especially as the popularity of electric vehicles grows. Electric car owners don’t pay gas taxes but still drive on the same roads and bridges maintained by those who must pay the taxes, she said.

Click here to read the full article at the LA Times

California poised to have the highest gas tax in the country

On July 1, the excise tax on gasoline in California will go up 5.6 cents a gallon, enough to push the state’s total taxes and fees past Pennsylvania to become the highest in the nation.

The 5.6-cent increase represents the second iteration of Senate Bill 1, commonly called the gas tax, that was passed by the Legislature in Sacramento in the spring of 2017 and signed into law by then-Gov. Jerry Brown.

Under the terms of SB1, the tax increase comes in stages.

Drivers first experienced a 12-cent per gallon rise at the pump in November 2017. An additional 5.6 cents per gallon will be tacked on at the beginning of next month, which will boost the state’s total excise tax to 41.7 cents a gallon. …

Click here to read the full article from the San Diego Union-Tribune

California gas prices surge to five-year high; what’s causing the spike?

California residents are paying much higher prices at the pumpcompared with the average U.S. resident.

As of Thursday, the average gasoline price in the state was about $4.02, according to AAA, compared with the national average of $2.83.

Those are the highest prices California has seen since 2014. Prices have risen around 68 cents per gallon over the course of a month.

What’s driving prices to multiyear highs? According to Dan McTeague, a senior petroleum analyst at GasBuddy, it’s a supply crunch resulting from refinery upsets in Los Angeles and San Francisco. …

Click here to read the full article from Fox Business.

California Gas Prices Climb 50 Cents in 1 Month Ahead of Gas Tax Increase Slated for Summer

Los Angeles County gas prices spiked again over the weekend, with the average price climbing about 10 cents a gallon to $3.88 as of Monday, the latest AAA figures show.

That’s higher than California’s statewide average of $3.80 for a gallon of regular unleaded, which also happens to be the most expensive of any state at the moment.

In one month, prices at the pump have soared in the Golden State, climbing from an average of $3.30 to $3.80, according to AAA.

L.A. County, meanwhile, has seen an even sharper spike, with the cost increasing by about 55 cents since March 8. …

Click here to read the full article from KTLA5

Taxing the Oil & Gas Industry to its Knees


Oil Well PumpA one-two punch is being aimed at California’s oil and gas industry and that just may be fine with anti-fossil fuel crusaders but it could have an immediate disruptive effect on the California economy.

Between proposals to raise the oil severance tax and property taxes, California’s oil and gas producing companies face a double whammy that could threaten their businesses. While supporters of these tax increases may applaud the idea that oil production is cut back, they may not be so joyous if the double attack undercuts the state’s economy.

Senator Bob Wieckowski introduced a 10% oil and natural gas severance tax bill, SB 246, arguing that California producers should pay for the right to sever oil and gas from the ground such as is imposed by other oil producing states. Yet, many of those states do not levy ad valorum property taxes on the oil that sits in the ground as California does.

If the oil severance tax is not enough to threaten the industry, the split roll property tax initiative destined for the November 2020 ballot would levy another hit on many producers’ land and improvements.

California oil production has already fallen off dramatically over the last few decades. California oil production dropped from 394 million barrels in 1985 to 173 million in 2017.

Imagine what two tax increases would mean to the industry over a short period. The quest for renewable energy is moving forward but if the tax hit over the next couple of years reduces oil and gas production how does the state’s economy function to full capacity?

Despite being one of the top oil producing states, California already imports a large portion of its oil. That is because California is the second largest consumer of petroleum products in the nation and the largest consumer of motor gasoline and jet fuel.

Much of the imported oil comes from foreign countries but California receives a good portion of its oil from Alaska, one of those states with a severance tax but no property tax on the oil in the ground.

If a severance tax is passed in the Golden State, ironically, through the price of gasoline, consumers will be paying both the California severance tax and a portion of the Alaska severance tax as well.

A decade ago, Governor Schwarzenegger proposed a 9.9% oil severance tax to help rescue the state budget during the Great Recession. At the time, a study indicated such an increase would make California the number one state in oil production taxes, doubling what the companies paid and shelling out 40% more in oil production taxes than the next highest state.

Oil companies in the Golden State pay corporate income taxes, property taxes and sales taxes on their business. Not all oil producing states assess all these taxes, nor are the tax rates the same as high income, high sales and high corporate tax California.

Two years ago, the Los Angeles Economic Development Corporation issued a report  on the economic impact of the California oil and gas industry. The report found “the industry’s direct output of more than $111 billion generates more than $148  billion in direct economic activity, contributing 2.7 percent of the state’s GDP and supporting 368,100 total jobs in 2015, or 1.6 percent of California’s employment. Additionally, the oil and gas industry generates $26.4 billion in state and local tax revenues and $28.5 billion in sales and excise taxes.”

What happens to government coffers if production is reduced dramatically?

While the goal of some environmentalist might be satisfied with reduced production, it is doubtful the state’s economy could withstand the shock.

ditor and co-publisher of Fox and Hounds Daily.

This was article was originally published by Fox and Hounds Daily

Progressives Now Complaining About Gas Prices


Gas TaxOnly in California. Progressive policies in California have forced drivers to pay some of the highest gas prices in the nation. Now, a group of liberal legislators want the California attorney general to investigate why this is true.

Let’s recap what the progressives have inflicted on working Californians who are simply trying to get to work and get their kids to school and soccer practice. According to the California Center for Jobs and the Economy, gas prices dropped slightly in December but declined faster in other states. In the United States other than California, the average gas price was $2.26 per gallon. In California, it was $3.40, a premium above the national average of $1.144, a 50.6 percent difference.

California had the second-highest gasoline price among the states behind only Hawaii. Californians paid $1.48 per gallon more than consumers in Missouri, the state with the lowest price. That’s 77 percent more for the same tank of gasoline.

The Center also noted that “California’s fuel regulations and the isolated market created by those regulations continue to push the state’s cost premium up higher — a cost-of-living factor that in particular falls on lower-wage workers as they are forced to commute longer distances in order to find housing they can afford.” Those regulations include California’s unique cap-and-trade law and low-carbon fuel standards, rendering the production of gasoline an expensive and risky enterprise.

To read the entire column, please click here.

California Voters Decide to Keep Democrats’ Gas Tax Increase


Gas-Pump-blue-generic+flippedAmong numerous measures that went before the state’s voters Tuesday, Californians rejected a proposal to repeal a gasoline tax increase that was passed by the Legislature to fund road and transportation projects. Proposition 6 failed Tuesday after Democrats campaigned to preserve $5 billion a year to fix roads and improve transit.

The state’s Republicans sought to repeal hikes in fuel taxes and vehicle fees that are expected to fund $52 billion in transportation projects over a decade. Their plan also would have required voter approval for future gas tax hikes.

GOP lawmakers argued that California has grown too expensive and tax dollars need to be spent more wisely. They hoped the measure would help drive Republican voter turnout in contested state and congressional races.

“It’s about whether working families will be given some breathing room and whether we can address the high cost of living in California,” Carl DeMaio, a former San Diego city councilman who led the effort, told the Mercury News. “That’s real money.”

Democrats and construction industry and union leaders maintained the revenues are vital to upgrade California’s crumbling roads and bridges. …

Click here to read the full article from Fox News

Why Gas Prices are Going Higher in California


Gas-Pump-blue-generic+flippedIt has become raison d’etre to blame President Trump for everything wrong with California; including higher gasoline prices plaguing our state and contributing to a slowing statewide GDP. But in today’s world that is connected via air, land, sea and increasingly cyberspace; globalization and policies knit countries and states together like never before. Many times rendering geography and borders on maps obsolete – consequently, events in one region or country – affect continents, countries and states. California’s decision to never allow pipelines into the state, drill for oil and natural gas off our coasts and certainly not explore the billions in untapped fossil fuel reserves trapped in the Monterrey Shale is rippling across our state in the form of higher gas prices.

The Monterrey Shale – though considered technically hard to recover – is 64% larger than all other shale plays in the lower 48 US states. To believe the Monterrey Shale can’t be unlocked is economically unwise when you consider that in September Kuwaiti oil exports to the US dropped to zero for the first time since the first Persian Gulf War over rising US production. Furthermore, “U.S. net imports of foreign oil have dropped to a 45-year low.”

If California voters and policymakers wanted to lower gasoline prices, unlock poverty-alleviating affordable energy and create millions of high paying jobs then begin working with our world class universities to unlock the Monterrey Shale. It would be like when Governor Pat Brown built universities, highways and water systems that California and the US are still prospering from today. Our high gasoline prices have nothing to do with Trump, Iranian sanctions tightening supply or OPEC. This is a California problem that historically has some of the highest gas prices in the US, a newly instituted 12-cent per gallon tax and, “the most stringent regulations for its gasoline in the nation(US).”

On the ground it means few refineries are willing to produce gasoline for California and the situation becomes more dire when it was announced in September that the South Coast Quality Air Quality Management District (SCAQMD):

“Proposed an option that would ban a critical refinery process technology at two Southern California refineries that is required for manufacturing cleaner-burning gasoline.”

Consider this – of the 5 largest US states – California is #1 in poverty and Texas is #1 for growth. Texas is also the #3 exploration and production (E&P) producer in the world. Former Texas Governor Rick Perry used fracking as a policy tool, which achieved scientific breakthroughs, and corporate investment unlocking Texas shale basins into tax revenue that now has Texas being the #1 wind power generator in the US as well. Texas figured out how to use wind to their advantage and California could do the same with the Monterrey Shale.

The greatest impact a society can have on poverty, homelessness, and inequality along with overall human flourishing is abundant energy. California is blessed with billions of barrels of oil within our state and coastal waters. Moreover, we have enough natural gas to clean our air and continue dramatically cutting emissions like no continent, country or state can imagine. When the US began converting coal-fired power plants to natural gas this caused America to be the only industrialized country in the world to meet the Kyoto Protocol by dramatically lowering its carbon output and emissions through natural gas.

California should be the leader in natural gas E&P instead of legislating through Senate Bill 100 (SB 100) that our advanced society can only be powered by renewable energy (wind & solar). Imagine what gas prices will be like when renewable energy tries to replace the 6,000 modern-day products that originate from crude oil. Moreover, the 2015 US Department of Energy Quadrennial Energy Review (QER) unveils the biggest reason renewable energy will cause gas prices to continue rising in California when it states:

“Energy storage is a key functionality that can provide flexibility, but there is little information on benefits and costs of storage deployment at the state and regional levels, and there is not broadly accepted framework.”

If California fully deploys SB 100 and there isn’t available energy storage – and currently there isn’t according to the Los Angeles Times – then energy from electricity and gasoline prices will naturally rise. Supply will not be able to keep up with demand based upon storage capacity alone.

Back to no interstate pipelines – if California doesn’t alleviate that problem – then gasoline refined outside the state will increase and this will cause intensifying the carbon-intensive use of trucking and shipping petroleum for economic continuity. Domestic and foreign refineries that have less environmental regulations will lead to increased global emissions; and ironically trucking and shipping crude oil, petroleum and gasoline have higher carbon footprints. California will then continue increasing gasoline prices, its carbon footprint and endangering environmental safety since pipelines are the safest method to import oil over ships, trucks or railways. The wise environmental policy choice would be to build pipelines.

Our policymakers should begin understanding that unweaving the intricacies of fossil fuel from our economy is like undoing globalization for trade and commerce. Everything is now interlinked whether we like it or not. Oil and natural gas can power our future or increasing our use of renewable energy and demonizing anyone who doesn’t share the belief that the environment takes precedence over California economic activity can be our downfall.

But with gas prices rising and foolishly slashing fossil fuel use instead of taking Texas’ approach to energy (the all of the above approach: fossil fuels and renewables working together) California voters, citizens and policymakers only have ourselves to blame when gas prices rocket into the $5 per gallon range. With the US shale revolution taking place there is no reason why our prices shouldn’t be in the $2.50-$3 range. Environmental taxes and regulations are choking our economy, increasing our poverty and a big reason business is leaving California.

Todd Royal is an independent public policy consultant focusing on the geopolitical implications of energy based in Los Angeles, California.

This article was originally published by Fox and Hounds Daily

Legislatures Kill Transparency Pricing at the Pump


gas prices 2Californians now pay as much as $1.00 more per gallon of fuel than the rest of the country. Shouldn’t the motoring public know why?

A bill in the California Legislature to do just that was Senate Bill 1074, by state Sen. John Moorlach, R-Costa Mesa. Called “Disclosure of government-imposed costs,” it would have required gas stations to post near each gas pump a list of cost factors, such as federal, state and local taxes, costs associated with environmental rules and regulations including the cap-and-trade tax.

Numerous folks and organizations spoke in support of the bill at an April 23 hearing before the Senate Committee on Business, Professions and Economic Development. I testified myself. Absolutely no one from the public spoke in opposition.

But the Democratic-controlled committee didn’t want the public to know why we’re paying so much, and voted to kill the bill from future consideration.

I watched closely the action on the Senate floor. The senator who spoke most against the bill was Sen. Josh Newman, D-Fullerton. But when the time of the vote came and it became clear the bill would fail, he voted Aye, which could help him in his close recall election bid this June.

Newman already had enough problems on the issue because he provided the key vote last year to pass Senate Bill 1, which jacked up gas taxes $5.5 billion a year. An initiative to repeal that gouging at the gouging at the pump just submitted more than 1 million signatures and also should go before voters this November.

It’s strange that almost every other product we buy comes with the price listed on the tag, with the taxes then clearly added to the receipt: clothes, computers, cars, furniture, office supplies, books, etc.

By contrast, the price at the pump is not broken down by tax or other cost, but actually includes a multitude of taxes, as well as costs from numerous environmental regulations.

In addition to the federal tax on fuels that applies to all states, California’s state taxes are among the highest in the country. Beginning last November, SB 1 alone added 12 cents to a gallon of gasoline and 20 cents to diesel.

SB 1074 specified the multiple taxes and regulatory costs that would have to be listed: a) The federal fuel tax per gallon; b) the state fuel tax per gallon; c) the state sales tax per gallon; d) refinery reformatting costs per gallon; e) cap and trade program compliance costs per gallon; f) low-carbon fuel standard program compliance costs per gallon; and g) renewable fuels standard program compliance costs per gallon.

That’s a lot of taxes and costs.

The cap and trade costs, by the way, now are the major funding source for outgoing Gov. Jerry Brown’s favorite boondoggle, the Choo Choo train project.

The high fuel taxes impact not just drivers, but almost everything in our economy, such as the food carried to grocery stores, materials to housing construction and clothing to children’s stores. Even Amazon.com and other online retailers will charge more for shipping as their costs rise.

Especially hurt by the high cost of fuel are the working poor, who often must commute an hour or more inland because coastal housing is so expensive. Aren’t such people supposed to be a key constituency of the Democratic Party?

No wonder we now have a better understanding of why California suffers the highest percentage of people in poverty and a homeless crisis so acute it shocks the world.

SB 1074 would have given motorists information on what’s really going on. But for the Democratic supermajority in the Legislature, bliss is keeping Californians ignorant.

ounder of PTS Staffing Solutions, a technical staffing agency headquartered in Irvine

This article was originally published by Fox and Hounds Daily

The Public Deserves Transparency of Pricing at the Pump


Gas TaxFuel prices in California are among the highest in the country, as a result of some of the highest taxes in the country, plus the costs associated with compliance with various State environmental laws, which trickle down to the consumer, resulting in Californian’s paying as much as $1 more per gallon than most folks in the country. A bill currently working its way through Sacramento is SB 1074 (Moorlach) “Transparency in fuel taxes”.

Most everything that is bought, from clothes, computers, vehicles, etc., are based on price plus tax, except one item – transportation fuels, as the posted price includes everything.

Case in point was SB1 for Transportation Infrastructure funding that is targeted to raise $52 billion for infrastructure projects, added 12 cents to gasoline and 20 cents to diesel on November 1, 2016. With California already having some of the highest fuel taxes in the nation, the cost of those fuels did not change last November, but the posted price at the pump did change, but was not transparent to the public as to why fuel prices went up.

Low Carbon Fuel Standard (LCFS) compliance is getting tougher to meet each year as well as more costly each year. Today, the California Energy Commission (CEC) shows that the LCFS adds 10.1 cents per gallon for gasoline, and 6.8 cents for diesel. Those costs trickle down to the consumer and are hidden within the posted price of fuel at the pump.

The CEC also shows that Fuels Under the Cap (FUTC) i.e., the “boutique” fuel standards for gasoline and diesel required by the Federal Clean Air Act and the California Air Resources Board (CARB) to meet the state’s fuel blending requirements for reformulated gasoline standards accounts for 11.9 cents per gallon for gasoline, and 14.5 cents for diesel. Again, those costs trickle down to the consumer and are hidden within the posted price of fuel at the pump.

Cap & Trade revenues are funding the High Speed Bullet train as well as many other “green” projects. Within numerous state government agencies, there is a feeding frenzy on getting a piece of those lucrative cap and trade “fee” revenues for their projects. Again, those costs trickle down to the consumer and are hidden within the posted price of fuel at the pump.

The CEC shows that California fuel consumption is at the highest level since 2007. Fuels consumption for California’s 35 million registered vehicles in 2016, of which more than 90% were not EV’s, was 52 million gallons per DAY of gasoline and diesel. Sounds like a lot of fuel, but it’s only about 1 plus gallons per day per vehicle, resulting in refueling requirements every week or two.

With numerous incentives, 50% of the EVs in the nation are in one state-California, but they only represent about 7% of the 35 million registered vehicles. With the other 49 states accounting for the other 50%, it appears that nationwide, they are not endeavored by the EVs.

On a go forward basis, internal combustion engines appears to be the choice of citizens. The California economy is heavily driven by affordable transportation. Yet, Californians pay more per gallon of gasoline and diesel due to costs that are not transparent to the public.

A Yes vote on SB 1074 would expand transparency at the pump by creating a Quick Read (QR) Code that directly links the consumer with updated costs of taxes and regulated costs associated with the production of each gallon of fuel purchased would demonstrate that our elected representatives favor transparency of the costs that are included on the posted prices for fuel at the pumps to show the public why Californians are paying as much as $1 more per gallon than the rest of the nation.

On the contrary, a No vote on SB 1074 would demonstrate that our elected officials do not want the public to know why our fuel costs are among the most expensive in the country.

ounder of PTS Staffing Solutions, a technical staffing agency headquartered in Irvine.

This article was originally published by Fox and Hounds Daily