April 2023

New State Bureaucracy

Governor Newsom signed a bill recently that establishes a new state bureaucracy that is empowered to cap gasoline refining profits.  If refiners’ profits exceed the cap they will pay a penalty which will go into a special fund that legislators could use to “address any consequences of price gouging on Californians. 

Refiners will be required on a daily basis to turn over proprietary data so the state can investigate alleged fuel-market gaming.  Now of course: a leak of this confidential information would enable market gaming.  It would appear that the purpose of this law seems to be to deflect political responsibility for the state’s high gasoline prices which are caused by climate rules and taxes.

When prices surge Democrats in Sacramento order an investigation into “Price gouging.”

However, the investigations have never turned up any illegal or questionable conduct.

The fact is that state policies are the cause of high gas prices. California taxes add about 66 cents

a gallon to the price.  California’s cap-and-trade program and low-carbon fuel standard add another 46 cents a gallon to the price.  California also requires a special “clean” fuel blend that adds another 10 to 15 cents a gallon. 

California lost 12% of refining capacity between 2017 and 2021 and will lose another 8% by the end of 2023.  The result is a very tight fuel supply.  When a refinery has problems or needs to undergo maintenance prices spike. The new reporting regime and penalties will increase refinery

costs which of course will be passed onto consumers. 

Therefore, implementation of the new law is being punted to a new bureaucracy.


I never did give them hell.  I just told the truth and they thought it was hell.  Harry S. Truman



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