Californians continue to pay the price for war on oil industry

OPINION – California’s oil industry watchdog, Tai Milder, still doesn’t get it. Last month, Milder, the Director of the Division of Petroleum Market Oversight (DPMO) gave an update on the California gasoline market which was presumably prompted by recent events at a Bay Area refinery. Unfortunately, what is missing from this report to California’s leadership is a basic understanding of the impact that decades of bad policies are having on consumers – including the state’s goal to phase out fossil fuels and advance policies that actively increase the price of gasoline while demand remains high.

WSPA has seen plenty of poor policy choices in California over the years. Many of these have pushed companies in the oil and gas industry to make hard, costly choices including scaling back, changing operations, or leaving the state. Ironically, even when refiners lose money with price fluctuations, the state always makes money via the highest state gasoline taxes and other state per gallon cost additions when consumers fill their tanks. In fact, the latest numbers pulled from the U.S. Energy Information Administration, the California Department of Tax and Fee Administration, Low Carbon Fuel Standard data and recent Auction Settlement Price for California Carbon Allowances show that California consumers pay $1.07 in every California gallon pumped.”

Over the past two decades, things have certainly gotten worse as the industry has been blatantly targeted for aggressive phase out with no realistic, affordable, or workable plan for a transition away from traditional fuels that power California’s economy and enable its citizens to live life.  Indeed, after two special sessions, and considerable wrangling on policies that will provide no actual relief at the pump, here we are living with the new normal in California – energy costs that swing between high and really, really high.  California’s electric and natural gas utility consumers can empathize here too.  California’s volatile gasoline market is the result of relentless compounding of bad policies and overly ambitious goals set against a backdrop of steady demand from consumers who, while living life, simply cannot afford it.

The DPMO was created to be an oversight agency, monitoring the industry for market manipulation, amongst other things, even when the state makes far more money on a gallon of gas than a refiner. Yet, its appointed Director, who has access to upwards of millions of industry data points and a staff and consultants to help him understand how the oil and gas market functions appears ignorant to how the market works. His report lacks details on the relationship between supply and demand, which drives costs consumers see, or any historic assessment about how we got here.

We would like to see action toward providing real relief for consumers and policies that work to allow an industry that keeps our economy moving to function efficiently. However, on the horizon are more concerning developments including how policymakers choose to handle the reauthorization of the state’s cap and trade program and the implementation of the internal combustion engine ban both of which impact consumers at the pump in one way or another. Past policies, current deflections and future needs are creating volatility that threatens to make life for California even more unaffordable.

Catherine Reheis-Boyd is President and CEO of the Western States Petroleum Association (WSPA) where she oversees the trade organization’s operations and advocacy in five Western states – California, Arizona, Nevada, Washington, and Oregon.