Putting the Cart Before the Horse on the Cost of Gasoline

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Gov. Gavin Newsom ordered up a study on why Californians are paying so much for their gasoline. In the meantime, he has indicated he will soon lay out his policy on oil and gas drilling in California and the state’s quest to rely on renewable energy. The gasoline price study should wait until we learn what Newsom has in mind for oil drilling in the state. Because if he decides to curtail drilling in a significant way, the cost of gasoline at the pump will soar.

Californians are paying more than $4 a gallon while in other states the cost of gas can be found under $2.50 a gallon. Of course, California policies such as the cap-and-trade program and increases in the gas tax have something to do with this discrepancy. But, Newsom thinks the gas price is too high and he wants the energy commission to report back in a couple of weeks with the reason why.

On top of the increase in gas prices, Newsom is facing pressure from the environmental community to reduce or eliminate oil and gas production in the state as California pursues 100% renewable energy. An obvious target for environmentalists is ending the process of fracking to produce oil from shale that Governor Jerry Brown allowed to continue despite heated protests from the left.

But shutting or even reducing oil production in the state comes with consequences—especially in the area that Newsom wants studied: costs. That’s not all, of course. Multiple studies over the years show that California’s economy relies on the oil and gas industry, not only supporting hundreds of thousands of direct jobs in that industry, but a ripple effect to jobs that service the people involved in oil and gas production.

To the point of gasoline costs, if oil production is shut down, or more realistically reduced in some manner including eliminating certain types of production, oil will still be needed to keep the economy humming and to keep people on the roads to get to work. There are not enough reliable substitutes for the oil Californians consume to produce the energy needed now. So California would have to face imports of gasoline from other regions of the world and the cost at the pump would jump even higher.

Running a study on gasoline prices before Newsom outlines his energy plans would be a waste of time. Put the gas and oil plan out first then let the people know how much gasoline will cost. I doubt if they will be happy with the projections.

 

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