A new study released by Michael Mische, a professor at the University of Southern California’s Marshall School of Business, concluded that policies play a significant factor in higher gas prices in the state, whereas the governor’s office and others argue that price-gouging is still a critical factor.
“Based on 30 to 50 years of data, the primary conclusion from this study is that California’s high gasoline prices and supply dilemmas are, by design, engineering or serendipitously, largely self-inflicted, and the result of directed policies and a litany of regulations, taxes, fees and costs,” the study itself states.
“The economic evidence is abundant; California refiners have not engaged in widespread price gouging, profiteering, price manipulation, ‘unexplained residual prices’ or surcharges, magical or otherwise,” it continues.
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Mische explained to FOX Business what stood out during the research process.
“I think what really stood out in my mind was the fact that the population of California was growing, registered motor vehicles were growing, annual mileage was growing, but refineries were coming down. The number of refineries were dropping substantially,” he said in an interview.
“We began looking for price gouging, which we didn’t find. We looked for price manipulation and supply manipulation, which we did find,” the professor added. “But we did find, you know, the California regulatory environment becoming more stringent and the California operating environment becoming more expensive. Our refineries in California operate, you know, anywhere between 28 to 35 percent higher than the national average.”
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In terms of a policy solution, Mische said that the easiest way to lower prices would be to lower the gas tax and also making changes to make oil production less pricey in the state.
“There’s a number of legislative actions that could be taken to relieve immediately the stress on the California consumer, but … let’s be very realistic on this. I mean, the California legislature has no inclination to do that,” he said.
However, some California leaders still maintain that price gouging is a major factor in the state’s sometimes eye-popping gas prices. As of Friday, the Golden State has the highest average prices in the nation at $4.94 per gallon, according to AAA. In extreme cases, prices at the pump hit around $7 and even over $9 at a handful of stations in recent years.
“Governor Newsom has done more than any other Governor in recent history to tackle the challenge of rising gas prices – despite what the oil industry and its allies say,” a spokesperson for the governor told Fox News Digital in a statement.
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“In the two years since the Governor signed California’s gas price gouging law, the state has avoided severe gasoline price spikes like the historic 2022 spike, saving Californians billions of dollars at the pump,” the statement continued. “The law established the nation’s first state-level independent petroleum watchdog to hold Big Oil accountable, and the state has more transparency from the industry than ever before. And with last year’s special session on gas price spikes, we have more tools on the way, including requiring oil refineries to maintain adequate supply to protect the state from supply-driven price spikes.”
The Division of Petroleum Market Oversight, an independent agency through the California Energy Commission, told Fox News Digital that the extremely high prices in fall 2022 were “consistent with price gouging behavior” and that they are looking into “unexplained price difference between retail gasoline prices in California and the rest of the U.S.” after adding in taxes and regulations.
