Former California State Sen. Melissa Melendez recently spoke out against California’s Senate bill SBX1-2, which Melendez said could cause fuel prices to spike and hurt residents.
According to an editorial by Melendez on the Golden State Policy Council's website, Senate bill SBX1-2 would require the State Energy Resources Conservation and Development Commission to determine the maximum gross gasoline refining margin. A stiff financial penalty is imposed if refineries exceed the set government margin. However, Melendez and others suggest the measure isn't likely to have the desired effect.
“Californians deserve a fuel economy they can afford,” Melendez wrote. “Instead of ensuring adequate supply, SBx1-2 is yet another example of our state leaders doing the exact opposite.”
In April, gas prices in California averaged about $4.88 a gallon, the highest price in the nation. This is more than $1 a gallon more than the average cost across the U.S., according to the American Automobile Association (AAA). Some counties in California reach nearly $6 a gallon on average.
According to a report by the Orange County Register, business groups, such as the California Chamber of Commerce, argued the law is “unlikely to provide any price relief for consumers or businesses and in fact, will make matters worse” by potentially disrupting supply (thereby raising costs) and increasing the volatility of gasoline prices.
California’s gas is more expensive than other states for various reasons. California imposes taxes on oil companies and mandates cleaner fuel than is typically found elsewhere, so California’s gas can generally only be refined within the state. This makes California a “fuel island,” as it can't import fuel that has been refined in other states, the Golden State Policy report stated.
The California Energy Commission identified five significant reasons Californians pay more for retail gas than the rest of the country: higher gas taxes, higher production costs, environmental program costs, California’s short winters, and that California is a fuel island.