In addition to earthquakes, wildfires, power outages and an army of pooping homeless people, California is known for ridiculously high gasoline prices – thanks in part to the state’s notoriously exorbitant taxes.

And in the wake of $6.00 gasoline in some parts of the state, Governor Gavin Newsom has asked Attorney General Xavier Becerra to investigate “If oil companies are engaging in false advertising or price-fixing,” according to KCRA, after a new report suggests that big oil companies are overcharging customers by as much as $1 per gallon.

Name brand retailers – including 76, Chevron and Shell – often charge more because they say their gasoline is of higher quality. But a new analysis from the California Energy Commission could not explain the price difference, concluding “there is no apparent difference in the quality of gasoline at retail outlets in the state.”

The commission said California drivers paid an average of 30 cents more per gallon in 2018, with the difference getting as high as $1 per gallon in April of this year. The result is California drivers paid an additional $11.6 billion at the pump over the last five years. –KCRA

“There is no identifiable evidence to justify these premium prices,” Newsom wrote in a letter to Becerra.

That said, according to an April report in the Orange County Registerat $4 per gallon, approximately .98c of it is due to various taxes and fees.

  • Federal excise tax — 18 cents
  • State excise tax — 42 cents
  • State and local sales tax — 8 cents
  • State underground storage tank fee — 2 cents*
  • Additional costs for compliance under Cap & Trade, as well as the Low Carbon Fuels Standard — 28 cents
  • Total — 98 cents

* Note: The state and local sales tax is calculated at an average state sales tax rate of 2.25% percent although actual sales tax rates vary throughout California.

That said, “Severin Borenstein, a professor at UC Berkeley’s Haas School of Business and faculty director of the Energy Institute at Haas, said his own tax calculations came within a penny of that total. But the mystery surcharge — an added expense that has yet to be identified — has averaged 28 per cents a gallon from January through March of this year. When added to the taxes, that brings the total to about $1.26 a gallon,” according to the report.

“In January, a group of 19 state legislators sent a letter to the California Attorney General’s Office saying, ‘We want you to investigate this,’” said Borenstein, who added. “They have never replied. They said they don’t make public statements about investigations. We don’t even know if they are investigating it.”

So while California’s AG has been asked to investigate false advertising and price-fixing by the oil companies, Newsom’s letter is devoid of any request to look into the mystery surcharge found by Borenstein.



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