Gov. Gavin Newsom (D-CA) has been blaming the oil industry for high gas prices in California, but experts say the evidence just isn’t there.
“You’d have to explain why [oil companies are] ripping people off 50% more in California than the rest of the world and why they only choose to do it now,” economist David Kreutzer of the Institute for Energy Research told Fox News. “The big problem is we have policies in place, especially in California, that make it difficult to expand supply. When you have these rules and regulations that prevent markets from responding as robustly as they could, then prices are going to go up.”
While housing, food, energy, and almost anything else are more expensive in California, gas prices are particularly out of step with the rest of the nation at about $2 more a gallon despite being an oil drilling state. The national average on Tuesday was $3.85, compared to $5.94 in California, AAA reported.
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“Some people may fall for it, but I think people are getting tired of this story,” Kreutzer said. “It seems like they’re always gouging in California. You have to say, ‘Well, what’s California doing different today?’ They have a bunch of idiotic policies.”
The main reasons for inflated prices are excessive regulations, a gas tax of 54 cents a gallon, and an aversion to expanding refineries, Kreutzer said. Part of this involves creating a special blend of lower-polluting gas for summer months, when people drive more.
However, Newsom has been blaming oil companies for the sharp increase and has called for a special legislative session to address it.
“Gas prices are up while oil companies rake in RECORD profits. It. Does. Not. Add. Up. We cannot continue to allow greedy oil companies to rip us off at the pump,” Newsom tweeted.
The legislature attempted to impose a tax on oil companies in April, but the backlash was swift, and the bill was mysteriously deleted. It started out as a Republican attempt to have a moratorium on gas taxes, but the anti-Big Oil language was inserted instead.
Newsom has revived the tax idea in a video produced by his office that describes “oil company extortion.” Republicans fear that any such tax would be passed on to consumers.
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“The idea that the refineries or the oil companies are profiteering off of market conditions in California, I think is not an argument to be taken seriously,” economist Benjamin Zycher of the American Enterprise Institute told Fox Business. “Why weren’t they doing that 10 years ago, 20 years ago, five years ago?”
He added that high prices are the fault of “market conditions combined with the perverse public policies.”
