California Gov. Gavin Newsom’s messaging strategy around the state’s perpetually high gas prices seems to be paying off.
Nearly half of Californians accurately identified the state’s 60-cent gas tax as contributing to the roughly $1.30-per-gallon differential between California’s gas prices and the national average, according to a poll conducted last month by Slingshot Strategies and shared exclusively with POLITICO.
The next-most-popular culprit, though, was price-gouging by oil companies, which hasn’t been proven, despite Newsom going on the offensive in accusing them of inflating prices and signing a law last year to investigate their role.
And while a quarter of respondents named California’s bespoke, less-polluting gasoline blend as another factor driving prices, just 7 percent identified the state’s cap-and-trade and low-carbon fuel standard emissions trading programs, despite ads from the Western States Petroleum Association pointing to their impact.
“Voters associate the high cost of gas with these sort of atmospheric conditions in California,” said Evan Roth Smith, a pollster at Slingshot Strategies who conducted the survey of 665 registered voters in June at the behest of Liminality Capital, a financial firm and player in the California carbon market.
“‘Oil companies are greedy,’ right? ‘California is an expensive place to do business’ … it has a lot less to do with these very specific, niche things like the cap-and-trade system.”
Newsom made a big display of blaming refineries in 2022 when gas prices soared to $6.22 per gallon and the state created an independent watchdog to investigate market manipulation. But the investigation is ongoing, and “we haven’t seen any evidence of [price gouging] yet,” said Shon Hiatt, an associate professor of business at the University of Southern California focused on the energy industry.
Regardless of what the CEC’s new Division of Petroleum Market Oversight finds, it’s clear that all the attention on price gouging has lodged itself in voters’ minds.
“More and more Californians are recognizing that they’ve been getting ripped off,” said Newsom spokesperson Alex Stack, responding to the poll. He pointed to a $50 million settlement that Attorney General Rob Bonta announced last week with Vitol and SK over market manipulation after a 2015 refinery outage.
Hiatt said voters polled were mostly correct in their assessment of what causes higher gas prices in California.
Besides state and local taxes and a cleaner gasoline blend, the state is in fact a fuel island, where the small number of refineries have more power to set their own prices and influence the cost of gas by going offline, said Hiatt.
But he said the issue of price gouging still remains a question mark. “When you’re dealing with only fuel made here, and there’s not as much competition with that fuel, I could see the prices just kind of inch forward, but that’s not necessarily what I call price gouging,” said Hiatt. “[The governor’s office] is very effective in their messaging.”
Western States Petroleum Association spokesperson Kevin Slagle agreed that Newsom’s messaging has been effective. “It’s no surprise that people use the words of the governor to repeat back to the pollsters what they think is causing it,” he said, while noting that 65 percent of poll respondents did not say price gouging was a top factor.
But the CEC has indicated that the evidence so far points to foul play, noting that the price spikes of the last two summers were caused by refineries going offline without plans to backfill supply and with potentially manipulative trading happening during those undersupply moments.
“I’m glad to see the public understands how much oil industry profits contribute to higher gasoline prices,” DPMO Director Tai Milder said in an email. “The data clearly shows that when prices spike, profits spike — while taxes and fees remain consistent.” — BB
MORE ON GAS PRICES: While Newsom has been going hard on price gouging, speakers at the Republican National Convention last night went in on President Joe Biden, blaming him for gas prices and inflation across the country, reports Timothy Cama for POLITICO’s E&E News.
“Grocery prices are up more than 21 percent. Electricity is up 31 percent. Gas is up 48 percent. Mortgage rates have more than doubled. And rent is skyrocketing,” said Alabama Sen. Katie Britt.
Model Amber Rose, one of the convention’s celebrity guests, joined in. “When you fill up your gas tank, you’re pissed. I know I am,” she said.
In their draft platform, obtained by POLITICO, Democrats tout efforts to reduce energy prices and accuse oil companies of charging more than they should.
