Lawmakers request California DOJ investigation into mystery gas surcharge

- A group of 19 California legislators sent a letter this week requesting the state’s Department of Justice to investigate the hidden charge identified in a 2017 report on the state’s high gasoline prices.

"We note now...that the California cost differential does not in intself imply that any market participants have acted illegally," the lawmakers wrote on Monday to Attorney General Xavier Becerra. "However, there are a number of indications that the state's gasoline market lacks robust competition and that Californians are consequentially paying a steeper price, beyond what can otherwise be accounted for, compared to residents of other states." 

California gas prices are typically higher than elsewhere in the country.

But this week, California ranked highest in the nation, where it cost $3.25 per gallon, or a dollar more than the national average, according to AAA. At one station in San Leandro, Melinda Rieboldt was shocked to see that unleaded was $4.99 a gallon. "What's the story?" she wanted to know. 

High taxes are not entirely to blame, reported Bay Area News Group.  UC Berkeley economist Severin Borenstein, a lead author of the report, said that even with California’s recently increased gas tax, which voters upheld this past November, the state still ranks second in total taxes, paying approximately 73 cents per gallon, compared to Pennsylvania’s 77 cents, according to the American Petroleum Institute.

Borenstein also said that cleaner-burning and low-carbon fuel requirements contribute another 14 cents, and the state’s cap-and-trade program adds another 12 cents, according to BANG.

But motorists are still paying 22 cents more for each gallon of gasoline than they should, Borenstein wrote in an opinion piece for the Los Angeles Times in October. And, the mysterious part is that the surcharge showed up just a few months after the researchers started their work. Borenstein's calculations are noted in the lawmakers' letter, stating that his "unexplained" surcharge has "cost Californian's more than $17 billion, or about $1,700 for a family of four." 

Borenstein was chair of the Petroleum Market Advisory Committee, which in its final report strongly urged the commission to pay for an in-depth analysis of the surcharge. In their letter, the legislators said they were committed to seeking the funding the Department of Justice would need to carry out its investigation.

"Consumers deserve to know what they are paying for," said Assemblyman David Chiu. "This mystery surcharge is troubling, and thus far, no one has been able to explain why it exists. We are simply asking the Attorney General to look into this and get some answers."

The legislators on the letter are assemblymembers Chiu; D-San Francisco; Marc Levine, D-Marin County; Bill Quirk, D-Hayward; Jim Wood, D-Santa Rosa; Richard Bloom, D-Santa Monica; Ash Kalra, D-San Jose; Mark Stone, D-Scotts Valley; Buffy Wicks, D-Oakland; Laura Friedman, D-Glendale; Rebecca Bauer-Kahan, D-Orinda; Shirley Weber, D-San Diego; Robert Rivas, D-Hollister; and senators Jerry Hill, D-San Mateo; Henry Stern, D-Canoga Park; Ben Allen, D-Santa Monica; Jim Beall, D-San Jose; Mike McGuire, D-Healdsburg; Nancy Skinner, D-Berkeley; and Scott Weiner, D-San Francisco.

KTVU's Daniel Radovich contributed to this report.

This story was reported from Oakland, Calif. 

 
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