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California lawmakers demand investigation into mystery gas surcharge

Posted at 6:40 PM, Feb 01, 2019

Nearly two dozen California lawmakers are demanding the Attorney General investigate a supposed gas surcharge identified in a report from a U.C. Berkeley economist who believes Californians have overpaid billions of dollars for gas since 2015.

The report published by Severein Borenstein includes the findings of the Petroleum Market Advisory Committee, which believes a mysterious charge of 24 cents per gallon has been added at the pump.

“The differentials we’re talking about constitute $3-5 billion per year in extra payments since 2015 and a total since 2015 of over $18 billion,” Borenstein said.

He said the extra charge first appeared in 2015 after an explosion at the Torrance refinery impacted production levels, but the report shows gas prices never normalized as expected and actually increased in 2018.

“It’s like $40 to fill up,” said San Luis Obispo resident Michael Angrella.

Angrella gasses up his Subaru at least once a week and on Friday, shelled out $3.19 per gallon.

“I’m from New Hampshire, so it’s a lot cheaper there than it is here,” Angrella said.

Angrella, along with several others who spoke to KSBY while fueling up Friday, said the high cost of California gas impacts their travel decisions and may even impact their other spending habits.

“Everyone’s paying out the nose in California,” said John Harmon, who drives a lot for work.

On Friday, California had the highest average gas price in the country, according to GasBuddy.com.

That difference in cost is what fueled the PMAC to find out what’s behind the pain at the pump.

“We now face a much more expensive gasoline in California that can’t be just explained by our higher taxes and environmental programs,” Borenstein said.

But Ken Dewar, a San Luis Obispo fuel distributor, said state legislation is exactly the reason for California’s gas prices.

“Our air pollution requirements drive up our gasoline prices,” said Dewar, president of JB Dewar Inc.

Dewar said the high cost of fuel is exacerbated on the Central Coast by limited accessibility.

“We’re isolated geographically, don’t have a lot of population and cities close by,” Dewar said. “I think you’ll be happy with $3 to $4 (per gallon) gasoline for the foreseeable future.”

But Borenstein said there’s more to the issue, which he believes occurs somewhere between the gas distributors and gas stations.

Lawmakers said in their letter to the Attorney General that they are not alleging criminal wrongdoing, adding that the surcharge could be a result of a logistical issue, but said a closer look is necessary.

Borenstein, too, believes an investigation is warranted.

“When Californians are spending an extra $3-5 billion per year on gas, $1 million on an investigation is money well spent,” Borenstein said.