I have been out of the Legislature for over 16 years. That is only significant because after 8 years in the Legislatures, I started to notice that my Democrat colleagues in the majority during my time there spent a lot of time passing useless legislation, and ignoring the big problems of the state. My general speech against a bill would start “The freeways of California are too crowded, our schools are failing, our houses cost too much, and we are running out of water, out of gasoline, and out of electricity, yet here we are in the Legislature debating [insert stupid bill here].” I could give that same speech today, and be just as relevant as I was in 2002, 3, 4, 5, or 6. As just one small example, our Arrogant Lazy Authoritarian in Chief (the ALAIC) recently spent his time calling on private companies to attack the Florida Legislature over an education bill that focused on sex education for 5 year olds. ALAIC Newsom should worry about California schools failing California’s children, not Florida’s sex education curriculum. However, that means he would have to take on California’s teacher’s union, and since he is a wholly owned subsidiary of the union, he can’t do that, so he picks other states as his target.
Given this behavior by ALAIC Newsom, I thought it a good idea to look at each of the problems that used to be a problem in California, and seem never to go away. Who is causing the problem and how to solve it, or at least take a big chunk out of the problem.
To set this up, the short answer to the question “Who is responsible?” is government and those who run it, but most people don’t know how government causes the problem, or how getting government out of the way will fix a lot of the problem. The fact is free markets work and government regulation creates shortages of important goods and services, and it is those shortages that increase the costs of housing, gasoline, water, electricity, and undermine the ability of government to provide good schools and freeways. I will take the next few days to talk about those problems starting with gasoline.
There are three things about California that have created consistently high gasoline prices, two of them unreasonable environmental policies and the third unusually high taxes.
First, in 1992, the Chairman of the committee overseeing environmental issues in Congress was a Californian, Rep. George Miller. He stuck in the Clean Air Act of 1992 a specific provision that required California to adopt gasoline formulas unique to California, which basically meant that the only place a California gas station could get gasoline to sell in California was from a California based refinery. To comply with these regulations, California refiners had to add over a billion dollars in improvement to their refineries to meet these regulations. The unfortunate part of this whole scheme was that it was signed by George H.W. Bush, and it has done nothing except make California gas at least $1.50/gallon more expensive than gasoline in other states, mainly because of the government created gasoline shortages.
The problem is compounded by the fact that there are only 4 gasoline refineries in all of California, because there are so many regulatory barriers to building new refineries that none have been built in over 40 years. Once again, a complete government problem. One would think that if the Legislature really cared about reducing the price at the pump, they would fast track the permitting process to build more “California specific” gasoline, but they haven’t, so you pay an enormous premium cause by government created shortages. The other thing these same legislators can do is to exempt California’s gas stations from the “California specific” formulation, so that gasoline can be bought from any refinery in the country. That would automatically increase supply, and decrease costs. It would also be fought by the groups that make money off of environmental regulations. So you and I pay.
The third cost factor is simple. Extraordinarily high taxes. There several sources of those taxes: (1) the excise taxes (which go up every year); (2) a series of fees (which, quite frankly, are the same as taxes), including a “low carbon” gas fee, a greenhouse gas fee (how this differs from a low carbon fee is not clear, except that it is separate, making the total cost of greenhouse gas fees 37 cents/gallon) and the underground tank fee; and (3) the sales taxes. Total fees are 39 cents/gallon ,total excise taxes are 69 cents/gallon (51 cents of which are solely a California tax). The real kicker is that the sales taxes are assessed on the total gas costs, which includes the fees and excise taxes (in essence a tax on those taxes). The total increase caused by these taxes and fees is $1.18/gallon. California could remove $1.00/gallon by simply suspending these taxes and fees. They won’t.
And Californians tolerate these high prices by continuing to elect the people who enacted these taxes, fees, and regulations. Those who support this government imposed scheme honestly don’t believe they will lose their jobs in the Legislature due to the scheme, because, quite frankly, voters have not removed them.
Nothing is going to change until several people in the majority lose their elections. That requires Republicans in the Legislature to make the case to the voters, for voters to be aware of how the current majority is artificially inflating California gas prices, and for those same voters to vote differently than they have been voting for the last 30 years. Who knows? Maybe they will.
We deserve the government we get, and right now, it is that government, and not the oil companies, that are inflating gas prices in California.