h/t Brumar
Fool’s Gold Rush: The Unimpressive, Superlative Failures of California’s Energy Policy
By Matthew Gonzalez
September 16, 2024
California has consistently positioned itself as a leader among states in making public policy, and for much of its history, this was a mostly positive attribute that led other states to follow its lead.
But the shine is coming off the Golden State’s reputation after more than four decades in which California policymakers have crafted a tutorial on what not to do – especially for energy policy.
Consider the unimpressive superlatives California now owns: Some of the highest gasoline prices, highest diesel fuel costs, and highest electricity costs in the country and in the world.
The cost of gasoline in California was only a few cents higher than the national average throughout the 1980s. Today it’s 80 cents higher, and just a year ago, it was $1.50 a gallon more than the rest of the country. As for electricity rates—Californians pay nearly twice the national average.
One might wonder why gasoline has become more expensive in California over the past few decades, in contrast to the rest of the country.
Consider that state and local taxes and environmental fees imposed by Sacramento add about $1.22 to each gallon of gas. In contrast, according to the California Energy Commission, distributing, marketing, and refining costs and profits are only $1.14 per gallon.
Simple math here: The government is making more money per gallon than the companies that make the gasoline, once the cost for the required crude oil is deducted. That equation puts paid to politically-motivated allegations of price-gouging.
However, there is more to the story.
Since the 1980s, the regulatory and political environment has driven California’s oil production down 72%, increasing California’s reliance on foreign oil imports. At the same time, these policies have reduced refinery capacity by 30% with the number of refineries decreasing from 36 to only 14 today.
Yet, despite this hostile regulatory environment, the supply chain for gasoline and diesel fuel has been very responsive to the needs of families and businesses throughout the state. Refineries have maintained adequate storage against shortages, with in-state storage averaging one month of gasoline use, never falling below almost 2 weeks of supply.
Nevertheless, elected officials in Sacramento want to call a special state legislative session to impose new mandates requiring additional supplies of gasoline to be stored. Mandates which could, in the words of the California Energy Commission, “artificially create shortages“ where consumers will see, on average, “a higher price level.”
Bear in mind, that this higher price level does not include California Air Resources Board’s analysis released last year that found the state’s Lower Carbon Fuel Standard will “potentially increase the price of gasoline by $1.15 per gallon, potentially increase the price of diesel by $1.50 per gallon and fossil jet fuel by $1.21 per gallon” by 2046.
Consumers may fare better, since California is mandating electric vehicles (EV) and the Golden State has been ahead of the rest the country for EV adoption. That’s due to a variety of factors, from state subsidies to limits on consumer choices in the automotive marketplace.
Yet, as a recent report from Consumer Energy Alliance found, both new and used EVs are far more expensive than traditional vehicles, cost more to insure, and charging infrastructure inherently favors wealthier homeowners over working-class renters. Several studies have shown how inequitable the EV market is, with lower penetration in Hispanic communities in California, lower rebate rates, and poorer charging infrastructure in their neighborhoods.
Yet, like gasoline, Californians face some of the highest electricity rates in the country and the world, and the more California’s policymakers “fix” the problem, the more it costs the people. Two decades of government intrusion in California electricity markets has resulted in net metering tariffs that, according to The Public Advocate’s Office, have taken $8.5 billion from the pockets of working families to subsidize private solar panels for homeowners who are, more often than not some, of the state’s most affluent.
While the stated goals of California’s policymakers have always been to help working families while improving the environment, their results have delivered the opposite. California energy policies now subsidize the wealthy at the expense of the poor and working class, while businesses flee the state and a tide of citizens leave for economic opportunities elsewhere.
Instead of convening a legislative session to consider yet another set of policies that will only raise the cost of energy, the Governor and Legislature should call a session to start rolling back the bad policies that have increased the energy burden on working families, leading to energy injustice for the working poor while having no discernable effect on the environment.
That would finally show energy leadership that other states could follow.
Matthew Gonzalez is Consumer Energy Alliance’s Southwest Executive Director and Vice Chairman of the National Hispanic Energy Council.
Fool’s Gold Rush: The Unimpressive, Superlative Failures of California’s Energy Policy | RealClearEnergy |
