Opinion: Who profits from Southern California's high gas bills? The problem is we don't know (2024)

FAQs

Who is to blame for California gas prices? ›

A new study finds the real culprit is California's own government. “Pain at the Pump: Blame Politicians, Not Producers, for High California Gasoline Prices” is by Robert J. Michaels, an economics professor at Cal State Fullerton, and Lawrence J. McQuillian, a senior fellow at the Independent Institute.

Factors that could impact your bill include the commodity cost of natural gas (also referred to as the “core procurement gas price”), seasonal variations, an increase in your natural gas appliance usage, weather conditions, and any remaining unpaid balance from prior bills.

Shale oil producers are particularly well-suited to benefit from high gas prices given the relatively quick turnaround for extracting this type of oil. Shale is a type of rock that can be found Colorado, Utah, Wyoming and other states that contains oil and gas.

Dual Taxes

Adding to the bill at the pump, California motorists also pay the highest taxes in the country, according to data compiled by the US Energy Information Administration. Drivers in California pay a per gallon excise tax and sales tax.

"California has its own blend of gasoline, it has very high taxes, and it has a cap-and-trade program," De Haan said. "All of those factor into what you pay at the pump."

Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

High demand: Unusually cold weather has pushed Californians to throttle their thermostats. Low supply: Infrastructure repairs in Texas and high gasoline demand in Canada resulted in fewer imports to California, which gets almost 90% of its natural gas from out of state.

Southern California Gas Co., the monopoly that provides gas in Southern California, usually draws down its stored inventory of gas in the winter instead of buying it during the colder months, when it is most expensive.

Lowering the temperature on your water heater or setting it at 120 degrees, can save up to 22% in energy costs. Take shorter hot showers. Clean or replace your furnace filters according to manufacturer recommendations. Install proper caulking and weather-stripping to save roughly 10 to 15% on heating bills.

Why are oil companies making record profits? ›

In 2021, a swift recovery in demand and limited oil supply pushed up oil prices around the world, and Saudi Aramco more than doubled its profits, overtaking Apple as the world's most valuable company.

Exxon Mobil was the leading oil and gas producing company worldwide by net income as of 12-month rolling data from June 2024. Many oil supermajors are among the most profitable oil and gas companies after rebounding from losses caused by the COVID-19 pandemic.

The Facts: The Energy Commission has long maintained a web site that details the specific factors that have led to California's higher fuel prices. As summarized: Higher taxes. As discussed above, California has the highest state gasoline taxes and fees among the states and DC.

Agriculture is one of the prominent elements of the state's economy: California leads the nation in the production of fruits, vegetables, wines and nuts. The state's most valuable crops are cannabis, nuts, grapes, cotton, flowers, and oranges. California produces the major share of U.S. domestic wine.

Housing, transportation, food, utilities and taxes are the biggest factors driving the state's higher cost of living. Lack of affordable housing is one of the state's most pressing challenges.

The CPUC regulates natural gas utility service for approximately 10.8 million customers that receive natural gas from Pacific Gas and Electric (PG&E), Southern California Gas (SoCalGas), San Diego Gas & Electric (SDG&E), Southwest Gas, and several smaller investor-owned natural gas utilities.

California's gasoline has traditionally been more expensive than the rest of the country because of the state's special blend requirements, which are more costly to produce. California also imposes high taxes and fees associated with initiatives to reduce carbon emissions.

The manager of a Northern California gas station was fired after he accidentally set the gas price to 69 cents a gallon. John Szczecina, who served as the manager for a Shell gas station in Rancho Cordova, said he mistakenly placed the decimal in the wrong spot and that the price was supposed to be $6.99 a gallon.