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October 10, 2022

Gavin Newsom's idiotic plan to fight high gasoline prices

By Thomas Lifson

If you thought Joe Biden's attempt to jawbone gasoline station owners into lowering prices was stupid, make way for the king of dunces, California governor Gavin Newsom.  Californians pay the highest prices for gasoline in the country, well over $6 a gallon almost everywhere.  Even Hawaii, with no oil production, totally dependent on oil shipped in, now has cheaper gasoline than California.

Governor Gavin Newsom is on the ballot for re-election and wants to be taken seriously as a 2024 presidential contender, so he evidently feels the need to address his constituents' highest-in-the-nation level of pain at the pump.  But his response in a tweet last Friday is stunningly ignorant:

NEW: I'm calling for a Special Session to address the greed of oil companies. Gas prices are too high. Time to enact a windfall profits tax directly on oil companies that are ripping you off at the pump.

Ahem, it is the State of California that is responsible for its drivers paying the highest prices, as The Pacific Research Institute explains:

  • California has the highest motor fuel taxes in the country — 67 cents a gallon, says the Tax Foundation, using American Petroleum Institute data. Second highest are in Illinois, 60 cents a gallon. The national median is about 30 cents a gallon.
  • Due to "big-government energy policies," California drivers pay a 37% premium for gasoline compared to the national average. Backing off these mandates would have saved drivers $9.6 billion in 2020 over 2019.

California imposes unique requirements on gasoline formulation, and these change with the seasons, requiring refineries to temporarily shut down to make the transition.  Gasoline cannot be imported from other states to make up the difference, so that constriction in supply drives up prices to the point where some drivers stop using so much gasoline, so as to keep supply and demand in balance.  This is happening right now.  If Newsom were to suspend these requirements and allow gasoline to flow in from other states, prices would fall in California (and rise elsewhere a bit).

  • Carbon cap-and-trade policy adds more than 14 cents a gallon to the cost of gasoline in California.
  • As requirements of cap-and-trade and the low carbon fuel standard become more demanding, their costs will continue to add up, reaching a range from 89 cents to $2.10 a gallon.

In the fairyland Newsom inhabits, adding more cost to the production and sale of a product results in lower prices, but in the real world, those taxes just add to prices.

The reaction on Twitter was swift and devastating.  Ron DeSantis's campaign press secretary:

Gas prices in Florida are half the price in California. Why is it only California with $7 gas right now!

Does greed stop at the state line?  Or do the malign effects of Newsom's taxes and regulations stop there?

ZeroHedge pointed out this chart from Mish Talk:

Newsom's suggested windfall profits tax will only discourage more investment in refining and distributing gasoline, further constricting supply.  I suppose that in Newsom's mind, this is good because it will force drivers into electric cars.  But since the state already suffers from blackouts due to peak demand for electricity exceeding supply, such a "transition" would only make matters worse for both drivers and those who need electricity for the homes and workplaces.

Gavin Newsom apparently can't think his way through these issues, something a reasonably clever 12-year-old could master.

To top it off, nobody expects Newsom to be defeated in his quest for re-election.  California voters are even stupider than he is.

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