study warns state officials about policies increasing price at the pump

By RIA JOSEPH THE CENTER SQUARE CONTRIBUTOR

(The Center Square) – When studies are predicting $7 a gallon gas for California, the state’s experts are warning legislators that anything they do to counteract alleged price gouging should be designed not to make it worse.

“We suggest the Legislature clearly identify the problem it is trying to address. Identifying the problem is important because it can help focus policy actions towards strategies that most directly target the problem,” said Ross Brown, Principal Fiscal & Policy Analyst at California’s Legislative Analyst’s Office, in his key considerations presented to the Senate Committee on Energy, Utilities, and Communications.

The recommendation comes as Gov. Gavin Newsom embarks on formulating legislation to penalize petroleum refineries for what he deems as excessive profits.

The Senate is exploring the root of price hikes in California last fall, with a mission to recommend policy to the governor.

“Americans like to hold onto the myth that politicians are allpowerful and all-knowing, but when it comes to gasoline prices, global influences on supply and demand are really the gremlin that determine prices, and politicians who really only care about your vote, would love you to think they can control everything, but really can’t do much over global fundamentals driving prices down or up,” Patrick De Haan, Head of Petroleum Analysis at GasBuddy said.

Accurately identifying the problem, the LAO says, would make it more likely that “the proposed policy is effective at addressing the problem” and it “reduces the risk of unintended adverse effects.”

In California cities such as Los Angeles, San Francisco and Sacramento can see fuel prices approaching the $7 mark this summer, for the highest daily average according to the latest analysis by GasBuddy on fuel prices for 2023.

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