05-18-07 by dugan
I went to a freeway-adjacent Chevron Station in LA ($3.49 a gallon for regular) this morning to hear Assembly Speaker Fabian Nunez talk very tough about the oil and refining industries: “Skyrocketing gas prices are hurting California families and jeopardizing our economy. During the electricity crisis a few years ago California adopted … measures to keep energy companies from using these convenient shutdowns to amp up their profits and today we’re going to make sure oil companies can’t use Enron-like tactics on California consumers.”
Nunez said at this press conference that he’s proposing legislation to get prices and these profiteering companies under control. Nunez accurately noted that “refineries shut down, prices go up, and profits go through the roof.” He accused oil companies of “cashing in” on suspicious refinery outages.
The solutions I heard are good—a start at regulating refineries, a plan to get much more information about refinery operations and profits, and a more nebulous plan to “study” and maybe act on “hot fuel” (the fact that we pay for more gasoline than we get when the gasoline temperature rises above 60 degrees—which is most of the time in this state.)
There are plenty of caveats—there’s no legislative language yet, the oil industry had a spokesperson pre-spinning and post-spinning the press conference, and the industry will use all of its lobbying might against these proposals. The industry’s track record at getting its way in Sacramento is nearly 100%.
It will take legislative spine and a governor willing to admit that “the market” is broken when it comes to gasoline. But my bet is that if the Legislature actually passes strong proposals, Gov. Schwarzenegger knows he’d look like an oil industry shill in vetoing them.
Here’s the gist of what was said and proposed, by Nunez and three Assembly members—Mike Davis and Mike Feuer of Los Angeles, and Mike Eng of the San Gabriel Valley.
Refinery Regulation
Nunez said he would establish a new state body, the Refinery Control and Standards Committee. This body would develop new standards for expanded regulation of refineries by the California Energy Commission. The commission would have oversight of the scheduling of maintenance outages and the length of both planned and unplanned outages. Members would include the state Attorney General, the Controller’s office, the energy commission, the state Air Resources Board and a “technical expert” appointed by the governor (read: oil industry representative).
If the proposals pass as proposed, said Nunez, they would “Grant the CEC authority to share key data with the Attorney General” if wrongdoing is suspected. The Board of Equalization, the state’s chief taxing body, could offer pertinent information to the CEC.
He said “penalties will be very stiff,” with violations charged as felonies.
During questioning after his statement, Nunez adamantly denied that he is influenced by the oil companies, and said his travel on a junket that included oil company representatives to Brazil last November was purely “to learn what other countries are doing” regarding biofuels. “We stand on issues important to Democrats and to our constituents,” he retorted. Good… that means this legislation has a chance.
We just hope the legislative language will be as tough as the press conference language, and won’t be turned to mush by oil industry amendments.
Refinery Reporting and Transparency
Last year, the California Energy Commission admitted that its attempt to find out if oil companies and refineries were gouging motorists (remember last year’s record, a measly $3.38 a gallon?) was thwarted by lack of adequate information about refinery operations.
Assemblyman Mike Feuer, a freshman who is head of the Assembly committee on Transportation, outlined some badly needed expansions of reporting. Sounds dull, but this could be the most significant of the proposals because information is power.
He outlined new oil company reporting requirements on “exploration, production and trading,” as well as details on individual refineries’ profit margins—something that, amazingly, is not reported now. His legislation, he said, would also track actual gasoline storage by individual refineries and imports and exports. The oil companies themselves know this information about all their competitors, so the state and people should know it, too. It is lack of supply on hand that drives price spikes when a refinery has any glitch.
Cautionary note: Feuer told me after the news conference that he wants to make as much of this information public as possible, “as long as it is allowed by law.” He was certainly talking about PIIRA, the Petroleum Industry Information Reporting Act. Whatever he does will remain out of public view unless that law’s definition of industry “competitive secrets” is greatly cut back. Since the industry lacks competition by any definition, it should have few if any allowable trade secrets. These companies already know everything about one anothers’ operations, and there is no reason to keep production and profit information from the public.
Hot Fuel
Assemblyman Davis will be the listed author on this proposal, but it seems vague. First, the state would conduct a “cost and benefit” study. What, to find out if drivers deserve to get all the fuel they’re paying for, especially in the hot summer months? Whatever happens after that study will be “ready next year,” Davis said. It could include regional pricing by gasoline temperature, and state assistance for installation of temperature-measuring nozzles at gas stations, he added.
On this one, we reserve judgment until we get past the study stage. That’s because the people who don’t want temperature-adjusted fuel, the oil companies and distributors who profit from motorists’ overpayments for hot fuel, are also calling for “cost-benefit studies.”
That’s it, folks. Certainly more than you wanted to know. But we’re getting some of the promises on the record now, for comparison with the legislation later. Bear with us.