For years, California’s Democratic leaders have tried to attribute the state’s high gas prices to “gouging.”
Professor Michael Mische with the USC Marshall School of Business has recently issued a report making clear this isn’t true.
“There is no economic evidence of widespread price gouging, price manipulation, undefined price residuals, surcharges, or profiteering by California refiners,” he wrote.
Mische also points to investigations by the California attorney general’s office dating back to 2000 repeatedly failing to prove gouging.
“In fact, both the State’s own California Energy Commission (CEC) and the California Attorney General have, at various times, concluded that California’s chronically high retail gasoline prices are a function of the high operating costs in California, tight in-state supply due to diminishing refineries and lower gasoline stocks, the lack of secondary supplies and sources, lack of in-bound pipelines, and the high tax and regulatory cost environment imposed on oil producers, refiners, and gas station operators,” he wrote.
Mische points to these very factors as still the chief drivers of California’s higher-than-average gas prices. What a concept, policies have consequences.
High tax and regulatory costs, “aggressive environmental policies” and a growing reliance on foreign imports come together with the state’s high cost-of-doing-business to make gas prices high.
Mische’s findings echo a study this editorial board highlighted this time last year by Robert J. Michaels, an economics professor at Cal State Fullerton, and Lawrence J. McQuillan at the Independent Institute.
That report, titled “Pain at the Pump: Blame Politicians, Not Producers, for High California Gasoline Prices,” noted: “Until about 20 years ago, California’s gasoline prices were in the midrange of all U.S. states. They have jumped to the top, however, a consequence less of market fundamentals than of conscious public policy choices by government officials at all levels. Those policy choices unfolded against a backdrop of world crude oil markets and changing retail structures.”
None of this is mysterious or complicated to figure out.
If Californians want lower gas prices, they have to demand cuts to regulations, lower taxes and even the return of local production.
Everything else is just theatrics from the Democrats to pretend to be doing something. But the phantom of “gouging” is an invention for purely political ends. It doesn’t exist. The problem comes down to policy.
