Solve the state’s mysterious 48 cents per gallon gas surcharge

Californians have been paying a heavy price since 2015 for state officials’ failure to solve the mystery of an unresolved gas surcharge that may be flowing into the pockets of oil companies.

The governor and lawmakers have offered little more than lip service, though the Mystery Surcharge in 2021, motorists cost about $4 billion, or about $400 for an average family of four.

The legislature was due to pass Senator Ben Allen’s bill that would require oil refiners to disclose the average price they pay for crude oil along with profit margins on the gasoline they sell each month. But that’s just the first step in bringing much-needed transparency to California’s gas prices. Legislators should also give a state agency the power it needs to study oil industry pricing patterns.

It will not provide immediate relief from rising prices. But it would pinpoint a problem that has been costing consumers between 30 and 50 cents a gallon since 2015.

Make no mistake, Russia’s invasion of Ukraine is primarily responsible for the recent rise in California gas prices to an average of $5.75 a gallon on Tuesday. The rapid surge is putting pressure on Gov. Gavin Newsom and the Legislature. But as we noted in Sunday’s editorial, the Governor’s gas tax rebate Suggestion is a bad idea. This also applies to the term “holiday” in the gas tax.

The gas price in California is the highest in the nation. That’s partly because of ours high Tax rate on fuel and the cost of producing our special gas blend that has helped reduce pollution in the state. And then there’s the Mystery Supplement.

It was Professor Severin Borenstein of UC Berkeley who uncovered the bid. Borenstein says that before 2015 it was pretty much non-existent. But since an Exxon-Mobil refinery explosion earlier this year, a large, inexplicable bounty has gone to gasoline sellers. He estimates the current surcharge at an outrageous 48 cents per gallon.

The California Energy Commission hired an independent panel of energy experts, chaired by Borenstein, to investigate the matter. But it didn’t give the panel the power to bring oil companies to the table, let alone disclose their pricing practices. Newsom later asked the Attorney General’s Office to investigate gas prices in California, but the AG is primarily concerned with looking for criminal behavior, such as price-fixing, when what might be needed to solve the problem is more regulatory in nature.

One way or another, California needs to get to the bottom of the mysterious gas surcharge. The sooner the better given the likelihood of a widespread war in Ukraine and persistently high prices. The governor and legislature should act immediately to present a clear picture of whether oil companies are unfairly benefiting at the expense of California drivers.

Editor’s note: Severin Borenstein, professor of economics and public policy at UC Berkeley’s Haas School of Business, is the brother of Daniel Borenstein, editor of the East Bay Times editorial page. Ed Clendaniel, editor of the Mercury News editorial page, wrote this editorial. Solve the state’s mysterious 48 cents per gallon gas surcharge

Joel McCord

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