Many people have a favorite gas station that always seems to be a few cents cheaper than the rest. Frugality might kick into overdrive this summer as gas prices could approach $4 a gallon.
Californians pay more to fuel their cars than other Americans. That’s partly because of state environmental and climate fees as well as blending requirements aimed at reducing air pollution. The state also increased its gas excise tax by 12 cents in November to help fund transportation improvements.
But the biggest reason prices are rising in general is not California-bred, or even American. International markets and producers are to blame, analysts say. OPEC — the Organization of the Petroleum Exporting Countries — and other major oil producers, including Russia, decided to limit output two years ago. Meanwhile, Venezuela’s political and economic crises are further decreasing global production. And, as we all know from basic economics, as supply drops, prices rise.
Tack on the usual summer travel season with its increased demand and, presto, $4 per gallon is a possibility.
Yet as painful as that might be to motorists, it’s not the right time to say “yes” to a Republican-backed referendum that would roll back last year’s excise tax increase.
The increase, and the higher registration costs that began in January, fund about $5 billion annually in needed transportation projects across the state. Moreover, if President Donald Trump’s talk about boosting infrastructure spending becomes reality, California could use the money for federal matching dollars. That could lead to even more projects and better roads.
That said, Californians deserve to know exactly how their gas prices are calculated. Right now, there’s a mystery lurking in the price. A lot of the cost of gas is accounted for, but some of it seems to just disappear.
Gas taxes are a smorgasbord of levies. It starts with the federal excise tax of 18.4 cents. Then drivers here pay for cleaner-burning gasoline that costs about 10 cents a gallon to make. The state’s cap-and-trade program adds about 12 cents a gallon. And California has a low-carbon fuel standard that adds about 7 cents a gallon.
UC Berkeley business professor Severin Borenstein, an expert on the oil and gas industries, chairs the California Energy Commission’s Petroleum Market Advisory Committee. Even with his expertise, he refers to the “mystery gasoline surcharge” that totals 20 to 30 cents on every gallon pumped in the state. A state committee he led that looked into the mystery did not come up with a firm explanation.
We’re with him on his call for the state to more thoroughly investigate this added California price pain that stumps even the people who study gas prices for a living.
Given the amount of gas consumed here, the mystery charges amount to $3 billion or more a year. Where’s that money going?
That mystery, however, is no excuse to roll back the gas tax that is transparent and is producing results already.
No Californians cheer “We’re No. 1” when they watch the dollars count up while filling their tank. But they should take some solace in knowing that taxes and fees are funding projects that protect residents’ health and improve the transportation system.
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