Taking on High Gas Prices in California and the Oil Industry: What Will Come Out of the Other End of the Legislative Grinder?

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.

em>Judy Dugan is the Research Director of the Foundation for Taxpayer and Consumer Rights, a nationally-recognized, California-based, non-profit consumer education and advocacy organization. She joined FTCR in March 2006 and is a former Deputy Editorial Page Editor for the Los Angeles Times. She most recently served as Senior Editorial Writer at the Times and was the Editor of a Pulitzer Prize-winning series on California government in 2004. Since 1987 she has held editorial positions with the Times including Assistant Op-Ed Editor and Voices Editor.