Photo by Brett Davis
(Kenneth Schrupp) – As the California Energy Commission considers adopting a rule to put profit caps on the state’s remaining 9 refineries — the only ones producing the state’s special gas formulation — Arizona and Nevada, which use California gas, could face higher gas prices.
“A potential maximum refinery margin and penalty … may actually increase retail prices for California, Nevada, and Arizona consumers alike. It may also cause California refineries to close prematurely,” said Arizona State Representative Justin Wilmeth, R-Phoenix, to the California Senate committee hearing overseeing the CEC’s adoption of a refinery profit cap. “These decisions will harm Arizona and they will harm Nevada.”
According to Consumer Watchdog, this leaves California’s poorest workers the worst off, which they say justifies having profit caps.
“At $4 per gallon, 9% of an annual minimum wage salary is spent on gas, at $5 per gallon 11% of an annual minimum wage salary is spent on gas, and at $6 per gallon 13% of an annual minimum wage salary is spent on gas,” said Kim Stone on behalf of Consumer Watchdog at the hearing. “Low income individuals and families are the principal beneficiaries of a maximum margin because of its potential to reduce price spikes.”
“Such measures … would likely penalize California consumers by exacerbating the already limited supply of in-state gasoline. Implementing such a system could lead to fuel shortages that might trigger severe consequences across various industries,” said Dean Teller on behalf of the California Manufacturers and Technology Association. “It is crucial for the state to tackle the existing challenges related to gasoline supply, which would include permitting hurdles, physical limitations on production, marine imports, regulatory uncertainties that deter investment, and geographical restraints. We are concerned that such measures may deter investment in California’s refining capabilities and the shutdown of active refineries.”
The CEC is set to make a decision on whether or not to adopt a profit cap by the end of 2024.
By
Kenneth Schrupp | The Center Square
