Tag: Gasoline retail

With a record number of travelers expected to drive this July 4, here’s how to save on gas

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A record 43.2 million people are expected to travel by car this July 4 holiday, according to AAA, the motoring and leisure travel membership organization.

The good news for those drivers is that gas prices around the country are lower than they were last year.

The national average for a gallon of gas is $3.54 as of July 3, down from $4.81 one year ago, according to AAA.

Last year’s high prices prompted politicians on the state and federal level to call for gas tax holidays.

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Though gas prices are currently still high compared to historical averages, drivers have no plans to cut back on road travel, according to AAA.

That’s as this summer is proving to be a particularly popular travel time. The busier season has not been without complications, including mass flight disruptions leading into the July 4 holiday.

A recent Bankrate survey found 63% of adults plan to take a summer vacation this year, up from 61% last year.

“People want to go somewhere, they want to do something,” said Ted Rossman, senior industry analyst at Bankrate and CreditCards.com. “There’s still a lot of pent-up demand that backed up during the pandemic.”

That demand has helped push categories like airfares and hotels higher this year, Rossman noted.

Bankrate’s survey found 80% of travelers are planning to adjust their plans due to higher prices.

Opting to drive instead of fly was one of the more common changes, according to Rossman, in addition to choosing cheaper accommodations or destinations and traveling for fewer days.

Travelers who are hitting the road by car or other vehicle may also look for ways to cut costs on gas.

1. Be proactive about finding lower prices

Those hitting the road this weekend may want to fill up if they’re passing through the least expensive markets, according to AAA’s recent ranking of the top 10 least expensive markets.

That includes Mississippi, with prices around $2.97 per gallon; Louisiana, $3.08; Alabama, $3.10; Tennessee, $3.10; Arkansas, $3.11; South Carolina, $3.17; Texas, $3.18; Oklahoma, $3.22; Georgia, $3.23; and North Carolina, $3.25.

Drivers everywhere may save by using apps to help them find better gas prices, such as Upside or GasBuddy, according to Rossman.

2. Look for a good gas rewards credit card

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Some credit cards may give you up to 5% cash back on gas, according to Rossman. That includes brands such as Chase Freedom Flex and Discover it Cash Back, he said, which are offering that rate between July and September.

Sam’s Club also offers certain cards that will allow consumers to earn money back on gas.

It is also worthwhile to check the perks your existing credit cards may offer, Rossman said.

“You may have a good gas rewards credit card and not even realize it,” Rossman said.

Of note, it is generally best to avoid gas-branded cards, which may come with high 30% annual interest rates and limited discounts on gas purchases, he said.

3. Try stacking discounts

Drivers should also look to stack offers where they can. For example, a credit card may offer 5% cash back on gas, and a gas station app may provide a 10% offer per gallon, Rossman said.

“That’s two ways to save instead of one,” he said.

4. Double-check your car rental coverage

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Rental cars are also comparatively cheaper this year, Rossman said.

If you’re thinking of renting a car, be sure to double-check whether your credit card may already offer insurance coverage.

“A lot of times, credit cards have various travel perks built in that people may not even realize they have,” Rossman said, which may also include provisions for trip delays or cancellations as well as lost or delayed luggage.

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July 3, 2023
California lawmakers to meet, eye big oil’s high gas prices

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SACRAMENTO, Calif. — Furious about oil companies’ supersized profits after a summer of record-high gas prices, California Gov. Gavin Newsom on Monday will formally start his campaign to punish big producers by asking the Legislature to fine them and give the money back to drivers.

State lawmakers will briefly return to the state Capitol on Monday to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also has called lawmakers into a special session for the purpose of approving a penalty for oil companies when their profits pass a certain threshold.

It’s bound to be a popular proposal with voters, who have been paying more than $6 per gallon of gasoline for much of the year. But the big question is how the measure will be received by California lawmakers, especially since the oil industry is one of the state’s top lobbyists and campaign donors.

Adding to the uncertainty is an unusually high number of new members who will take seats in the Legislature for the first time. More than a quarter of the Legislature’s 120 members could be new, depending on the outcome of a few close races where county officials are still counting votes.

“It’s kind of like the first day of school and you get this big ethics test about a job that you’ve never had,” said Jamie Court, president of Consumer Watchdog, an advocacy group that has partnered with the Newsom administration to back the gas proposal.

Among the state Senate’s new members is Angelique Ashby, a Democrat who narrowly won her seat following an intense campaign. The oil industry spent hundreds of thousands of dollars on radio and TV ads supporting Ashby’s campaign, a trend noticed by critics who tried to use it against her.

In an interview, Ashby said she hasn’t been approached lobbyists or others from the oil industry asking how she would vote on a potential penalty for oil companies. She noted the oil industry spent the money as “independent expenditures,” meaning she had no control over that spending during the campaign.

“Campaigns are not legislation, and the campaign slogans and strategies of my opponent are a thing of the past,” said Ashby, whose district includes Sacramento. “I’m fixated on the people of Senate District 8 and I will make my decision based on what is in their best interest.”

As of Sunday night, Newsom had not yet revealed his legislation and legislative leaders said they likely won’t begin deliberations on any proposal until January.

But the battle has already begun. Last week, the California Energy Commission held a public hearing about why the state’s gas prices are so high. California prices spiked over the summer, but so did the rest of the country — mostly in response to a crude oil price surge after Russia’s invasion of Ukraine.

California’s prices spiked again in October, even while the price of crude oil dropped. In the first week of October, the average price of a gallon of gas in California was $2.61 higher than the national average — the biggest gap ever. Since then, oil companies reported billions of dollars in profits.

Regulators had hoped to question the state’s five big oil refineries: Marathon, Valero, Phillips 66, PBF Energy and Chevron. But no company officials attended the hearing, with most saying that sharing information could violate anti-trust laws.

Newsom sought to shame those companies publicly, posting a video to his Twitter account of their empty seats during Thursday’s hearing.

“Big oil is ripping Californians off, and the deafening silence from the industry (at the public hearing) is the latest proof that a price gouging penalty is needed to hold them accountable for profiteering at the expense of California families,” Newsom said in a news release announcing the special session.

Catherine Reheis-Boyd, president of the Western States Petroleum Association, said the oil industry is volatile, pointing to billions of dollars in losses during the pandemic when demand for gasoline dropped sharply as many people worked from home and canceled travel plans.

During Thursday’s hearing, she blamed the state’s taxes and regulations for driving up gas prices.

“The governor and the Legislature should focus efforts on removing policy hurdles being imposed on the energy industry so we can focus on providing affordable, reliable and lower carbon energy to all Californians,” Reheis-Boyd said.

Severin Borenstein, a University of California-Berkeley professor, said the problem isn’t at the oil refinery level, but at the retail level where gasoline is sold to drivers.

California’s gasoline market is dominated by name-brand gasoline, which is more expensive, and the state’s gas prices have been consistently higher than the rest of the country since 2015, Borenstein said.

“We just don’t have the competition and discipline from those off-brand stations,” he said.

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December 4, 2022
US retail sales rose 1.3% last month, a sign of resilience

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WASHINGTON — Americans stepped up their spending at retailers, restaurants, and auto dealers last month, a sign of consumer resilience as the holiday shopping season begins amid painfully high inflation and rising interest rates.

The government said Wednesday that retail sales rose 1.3% in October from September, up from a flat reading in September from August. The increase was led by car sales and higher gas prices. Still, excluding autos and gas, retail spending rose 0.9% last month.

Strong auto sales may have been supercharged by the arrival of Hurricane Ian in late September, which destroyed up to 70,000 vehicles, according to economists at TD Securities.

Even adjusting for inflation, spending increased at a solid pace. Prices rose 0.4% in October from September. The government’s solid report contrasted with gloomy figures Wednesday from retail chain Target, which announced unexpectedly weak profits as its increasingly price-sensitive customers pulled back on spending.

Steady job growth, rising wages, and higher savings after many people cut back on travel and entertainment during the pandemic have enabled surprisingly steady spending by consumers, particularly those with higher incomes.

Economists pointed to two other factors that likely contributed to the gain: Amazon held another Prime Day promotion last month, and California distributed inflation relief checks of up to $1,050.

Yet there are ongoing signs that cracks are forming in consumers’ ability to keep up with the highest inflation in four decades. More households are relying on credit cards to pay bills, with nationwide credit card balances jumping 15% in the July-September quarter from a year ago, the largest year-over-year increase in two decades, according to a report Tuesday from the Federal Reserve Bank of New York.

“Consumers are likely turning to credit to support spending as wage growth lags inflation and high prices are eating away from the stock of savings,” said Jeffrey Roach, chief economist for LPL Financial.

And research last week from Bank of America found that consumers are increasingly seeking out cheaper options when it comes to groceries and dining out. Transactions by Bank of America customers, using credit and debit cards, show that they are now visiting cheaper fast food restaurants more often than full-service restaurants, after eating at both equally for about a year after the spring of 2021.

The Bank of America report also found that, adjusting for inflation, grocery spending per household has fallen sharply, to below pre-pandemic levels, even though visits to grocery stores haven’t fallen. That suggests many people are seeking out cheaper options when shopping for food.

Still, analysts said Wednesday’s government report on retail sales points to a healthier economy than previously expected. Morgan Stanley revised its forecast for growth in the October-December quarter to 1.7% at an annual rate, up from an earlier projection of 0.7%.

Strong consumer demand could perpetuate inflation, but other trends may work in the other direction. Auto sales jumped 1.3% last month, the retail sales report showed, but that gain, in addition to people replacing cars in Florida, partly reflects a clearing of supply chain problems that have made more auto parts and semiconductor chips available. Auto production has rebounded, leading to greater supply, which can push prices down.

Gas station sales jumped 4.1% last month, though that largely reflected higher prices. Online sales rose 1.2%, and restaurant and bar sales moved up 1.6%.

Walmart, the world’s largest retailer, reported strong sales growth Tuesday in its third quarter, as more shoppers, including higher-income ones, sought out its cheaper groceries.

The company said that consumers are trading down to private brands in baby items and baking goods, among other categories. It is also seeing wealthier customers. About three-quarters of Walmart’s market share gains in food came from customers with annual household incomes of $100,000 or more, the company said.

Inflation reached 7.7% in October from a year ago, down from a peak of 9.1% in June but still a level that hasn’t been seen in 40 years. There are some signs that prices are likely to keep declining as many supply chain snarls have unraveled, boosting stockpiles of goods at many stores. Some chains may soon have to resort to discounting to clear excess merchandise.

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November 16, 2022
Retail sales flat in September as inflation takes a bite

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NEW YORK — The pace of sales at U.S. retailers was unchanged in September from August as rising prices for rent and food chipped away at money available for other things.

Retail sales were flat last month, down from a revised. 0.4% growth in August, the Commerce Department reported Friday. Retail sales fell 0.4% in July.

Excluding sales of automobiles and at gas stations, retail sales rose 0.3%. Excluding gas sales, spending was up 0.1%

While the report showed the resilience of the American consumer, the figures are not adjusted for inflation unlike many other government reports. In fact, sales at grocery stores rose 0.4%, helped by rising prices in food.

Evidence that the Fed’s fight to cool the economy may be taking hold can also be seen, particularly with big-ticket items. Sales at auto dealers fell 0.4% last month, and shoppers continued to pull back on appliances, electronics and furniture, all categories that did well during the early part of the pandemic. Business at consumer electronics and appliance stores fell 0.8%.

Sales at clothing stores rose 0.5%, while business at department stores rose 1.3% That indicates a solid back-to-school season but adjusted for inflation, spending was modest, analysts said. Business at restaurants rose 0.5%, while online sales ticked up at the same pace.

Neil Saunders, managing director of GlobalData Retail said the report was “representative of an economy that is tightening and of a shopper that is becoming more discerning and cautious about what they buy.”

Consumer spending accounts for nearly 70% of U.S. economic activity and Americans have remained mostly resilient even with inflation near four-decade highs. Yet surging prices for everything from mortgages to rent have upped the anxiety level. Overall spending has slowed and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other non-necessities has faded.

“Even if people are employed and on paper look reasonably comfortable they are not feeling comfortable, and they are very concerned about what’s to come next,” said Joel Rampoldt, a managing director in the retail practice at AlixPartners.

Inflation in the United States accelerated in September, with the cost of housing and other necessities putting more pressure on households, eliminating pay gains and almost guaranteeing that the Federal Reserve will keep raising interest rates aggressively.

Consumer prices, excluding volatile food and energy costs, jumped 6.6% in September from a year ago — the fastest such pace in four decades. And on a month-to-month basis, core prices surged 0.6% for a second straight time, defying expectations for a slowdown and signaling that the Fed’s multiple rate hikes have yet to ease inflation pressures. Core prices typically provide a better picture of underlying price trends.

Overall prices rose 8.2% in September compared with a year earlier, down slightly from August, the government said Thursday in its monthly inflation report.

It is a crucial period for retailers as they prepare for the holiday shopping season, which accounts on average for 20% of the industry’s annual sales. Inflation is already changing shopper habits, causing them to trade down to cheaper stores like Walmart and dollar stores and within aisles, switching to cheaper brands.

Walmart and Target are among others that are pushing deals earlier while others are offering new financing for customers.

Conn’s HomePlus, a Texas furniture and mattress chain that caters to households at the lower end of the economic scale, launched a new layaway program that caters to the 20% to 25% of the chain’s applicants not eligible to qualify for other financing.

“(Shoppers’) ability to spend on discretionary is more limited than it was before, ” said CEO Chandra Holt. Sales on things like deluxe coffee makers other consumer electronics have faded, she said. .

A slew of holiday forecasts from various research and consulting firms point to a sales slowdown from last year, but adjusted for inflation, retailers could actually see a decline. AlixPartners predicts holiday sales to be up anywhere from 4% to 7% from last year, which was up 16%, according to its calculations. The National Retail Federation, the nation’s largest retail trade group, hasn’t released its holiday forecast.

Janet Barnes, a 42-year-old College Park, Maryland resident, says she’s trading down and going to cheaper stores for groceries as prices spike. Instead of Wegmans or Whole Foods, she now heads to the discount chain Lidl and said she saves about 40% in groceries. Thrift stores have replaced Nordstrom, she said.

“We are creatures of habit, said Barnes. “But it is not a bad deal to see what else is going on — and test something else.”

—————-

Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

AP Economics Writer Chris Rugaber in Washington contributed to this report.

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October 14, 2022
Newsom to call special legislative session over gas prices

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SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”

Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.

But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.

California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

“It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”

The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.

“If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”

Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.

It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”

That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.

Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.

The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”

“A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”

California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”

“Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”

On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.

He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.

Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.

“These guys are playing us for fools. They have for decades,” Newsom said.

The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.

The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.

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October 9, 2022
Newsom to call special legislative session over gas prices

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SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”

Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.

But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.

California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

“It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”

The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.

“If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”

Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.

It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”

That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.

Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.

The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”

“A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”

California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”

“Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”

On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.

He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.

Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.

“These guys are playing us for fools. They have for decades,” Newsom said.

The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.

The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.

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October 9, 2022
Newsom to call special legislative session over gas prices

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SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”

Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.

But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.

California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

“It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”

The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.

“If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”

Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.

It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”

That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.

Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.

The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”

“A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”

California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”

“Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”

On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.

He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.

Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.

“These guys are playing us for fools. They have for decades,” Newsom said.

The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.

The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.

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October 7, 2022
Newsom relaxes refinery rules as California gas prices soar

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SACRAMENTO, Calif. — California Gov. Gavin Newsom on Friday announced that oil refineries could start selling more polluting winter-blend gasoline ahead of schedule to ease soaring fuel prices, directly contradicting his own goals for reducing climate pollutants.

The average cost of a gallon of gas was $6.30 in California on Friday, far above the national average of $3.80, according to AAA. Newsom administration officials said the difference between state prices and the national average has never been larger.

The Democratic governor also called on state lawmakers to pass a new tax on oil company profits and return the money to California taxpayers. Lawmakers don’t return to the Capitol until January, Newsom’s office provided few details on the proposal.

“They’re ripping you off,” he said of the oil industry in a video posted to Twitter.

Oil industry representatives said it is state regulations that cause higher prices in California than the rest of the country. The summer blend of gasoline that refineries are required by law to produce in the hotter months costs more money to make but is designed to limit pollutants like smog. Most refineries can’t switch to the winter blend until November.

Switching from the summer to winter blend would likely save consumers 15 to 20 cents per gallon, said Doug Shupe, a spokesman for the Southern California Automobile Club, an affiliate of AAA. Gas prices in Los Angeles are close to breaking a record of $6.46 set in June, he said.

“If these prices go up to $7 a gallon, a 15-cent drop is not really going to mean much to drivers,” Shupe said.

Prices are spiking in part due to limited supply because some oil refineries are offline due to routine maintenance or other problems, he said. The California Air Resources Board, which regulates refineries, said high prices could also be due to part to a refinery fire and Hurricane Ian.

It’s the latest spat between Newsom and the oil industry, which holds political and economic sway in California despite the state’s aggressive climate policies. But Newsom’s dual actions Friday also illustrate the complicated reality Newsom faces as he tries to wean the state off oil and gas while responding to economic reality.

Earlier this year, for example, Newsom’s administration turned to generators and power plants that run on fossil fuels to help avoid rolling power blackouts during a heat wave.

By urging air regulators to let oil companies switch to a winter blend earlier, Newsom is acknowledging that state rules play a role in prices, said Kara Greene, a spokeswoman for the Western States Petroleum Association.

Refineries typically perform maintenance in the spring or fall as they prepare to switch fuel blends, she said. It will take time for refineries to prepare the winter blend, and Newsom’s order may have little immediate effect, she said. If Newsom truly wanted to lower prices, he could suspend the state’s gas tax or relax other regulations, she said.

“It’s a conscious decision to try and put the responsibility back on the oil industry,” she said.

Newsom said he expected the relaxation of refinery rules to increase supplies by 5% to 10% because refiners have already started to produce and store the gas.

“Any impacts on air quality caused by this action are expected to be minimal and outweighed by the public interest in temporarily relaxing” the limits, the air board said in a statement.

Starting in January, oil companies will be required to disclose their monthly profits to the state under legislation Newsom recently signed. Consumer Watchdog called on Newsom earlier this week to call a special legislative session to approve a tax on those profits.

Jamie Court, the group’s president, said he applauded Newsom’s efforts to deal with “an industry that’s out of control.”

Democratic leaders in the state Legislature said a windfall tax on oil profits deserves “strong consideration,” while Republicans said Newsom should immediately suspend the state gas tax to provide relief.

Major oil companies saw record profits this summer, and the price of crude oil has dropped since the end of the summer.

The California Energy Commission on Friday wrote a letter to executives of five major oil companies asking why prices rose so dramatically, what actions the state could take to lower prices and why refinery inventory levels have dropped.

Greene, of the petroleum association, said California regulations raise the price of oil by just under $1 in California, but other observers say its lower. Court, of Consumer Watchdog, says its around 60 cents, while Severin Borenstein, an energy economist with the University of California, Berkeley, says its closer to 70 cents.

Borenstein has also identified an unexplained surcharge that he says has caused Californians billions of dollars since 2015.

Newsom in 2019 directed the state attorney general to look into whether oil companies were overcharging Californians. Attorney General Rob Bonta has said his office is still investigating.

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October 1, 2022