Democratic California Governor Gavin Newsom threatened possible legal action against oil companies in a Tuesday tweet complaining about the high cost of gas in his state.
“CA drivers have paid an average of 30 cents more per gallon. There’s no identifiable evidence to justify that. I’m demanding an investigation. If oil companies are engaging in false advertising or price fixing — legal action should be taken,” Newsom tweeted.
While Newsom claimed that there was “no identifiable evidence to justify” the fact that Californians paid an average of $0.30 more per gallon, there were a few key indicators that the California governor appeared to be ignoring.
State tax rates:
California ranks first in combined state tax rates and fees which amount to approximately $0.61 per gallon. Only two other states — Illinois and Pennsylvania — have combined tax rates over $0.50 per gallon.
Another eight states — Hawaii, Washington, Michigan, Indiana, Florida, New York, Connecticut and New Jersey — have combined tax rates between $0.40-0.49 per gallon. The vast majority have tax rates of $0.39 or below.
Gasoline blends:
California’s more stringent environmental regulations have also played a part in raising the price residents pay at the pump, effectively turning the state’s fuel market into an “economic island.”
A 2015 article in the L.A. Times explained the phenomenon, saying that “the Golden State’s market is isolated from outside fuel suppliers that might moderate prices.”
In addition to the environmental regulations that affect all gasoline blends sold in California, the formulas change with the seasons — and the summer blend is even pricier than its winter counterpart.
Additional environmental requirements established for refineries have caused a number of refineries to close their doors, leading to further decreases in competition.
While California’s most recent gas tax hike — which Newsom supported – went into effect this past July, many of the environmental regulations impacting price at the pump predate his time in the governor’s mansion.
