Dow Jones’ online Marketwatch predicts today that U.S. gasoline prices could reach $4 a gallon. Bulletin: In San Francisco they already have, at some stations. The area average today hit $3.363, matching its all-time high last May. The San Francisco Chronicle reports thoroughly today on the startling price rise, but a couple of points call for comment.
First, state investigations of price-gouging on gasoline haven’t come to a hard conclusion in part because they haven’t dug deep or even subpoenaed a couple of CEOs (particularly true of Gov. Schwarzenegger’s wimpy effort last year)–and because the state’s price-gouging law applies only at the retail level. Pump prices are being driven by record and still-rising refinery profits, which are at the wholesale level. In addition, much of the information investigators would need to determine gouging is protected as “trade secrets.” In an industry as uncompetitive and vertically integrated as oil and refining, the need for secrecy should be trumped by the public right to know.
A law to broaden California price-gouging statutes last year died on the final day of the legislative session, under withering fire from the oil industry. Given where prices statewide are headed, Assembly Speaker Fabian Nunez should immediately revive and strengthen AB457, as the measure was known. Unfortunately, the Legislature’s silence in the face of the new pump-price crisis has been deafening.
In the longer term, regulation and oversight of refinery output and updated antitrust legislation must be combined with stronger encouragement of renewable fuels. Only using less oil will ultimately rescue drivers from the grips of the oil industry’s profit orgy. On that point, the first step should be ending oil companies’ ridiculous restrictions on gas station owners who want to sell alternative fuels such as E85, which is 85% ethanol.