Cutting gas prices, or not

The legislative special session called to rein in high gas prices has adjourned. A bill that supporters claim will help prevent gasoline price spikes by increasing reserves, AB X2-1, passed on a party-line vote. Unfortunately the bill, along with other measures that could be implemented soon, may have the opposite effect.

The measure is aimed at preventing price spikes when refineries temporarily shut down for maintenance, creating fuel shortages and driving up prices. However, the California Energy Commission studied the issue and determined that creating/maintaining the reserves could cause shortages and increase costs.

Furthermore, regulations that stand in the way of the refinery expansion necessary to create and maintain the reserve are still in place. It can take 10 years and cost $35 million just to build a single storage tank – costs that would be passed on to motorists.

The California Air Resources Board (CARB) is scheduled to meet in November to discuss imposing lower carbon standards that could easily add a half-dollar per gallon to the cost of gasoline – some say the increase could be up to 65 cents per gallon, with even higher future increases.

CARB has refused to estimate the costs, and Steven Cliff, CARB’s executive officer, stated “What we are not equipped to do is analyze what effect (the lower carbon standard) would be on retail gasoline prices.” CARB Chair Liane Randolph should delay the vote until true costs and benefits of the new standards can be analyzed and made public.

Increasing gas prices by this much will have a devastating impact on California’s economy. But there are obvious alternatives. My caucus introduced several bills, including one that would have suspended California’s highest-in-the-nation gasoline tax. The Assembly majority blocked any consideration of these bills, and instead, they approved AB X2-1.

Hardworking Californians are hurting. Massive fuel price increases will drive up overall inflation and wreak havoc on those who can least afford it.