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Could California's higher gas prices be illegal? Economist says maybe so

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Published  November 17, 2021 5:09pm PST
Economy
KTVU FOX 2

California gas prices average 30 cents a gallon higher than other states

A local economist says California's higher gas prices than other states could be illegal, but says the state government does not appear to be concerned with digging in to an investigation.

SAN FRANCISCO - Fuel sticker shock has now turned into the 'reverse limbo' question of "How high can you go, setting new records every day?" 

From crude oil to refining to the gas station, gas prices are a big issue especially here in the Bay Area. Pain at the pump? You bet.

Right now, Bay Area folks are paying $4.82 a gallon for regular, up from $4.70 a week ago, $4.62 a month ago and a buck and a half more than a year ago. 

UC Berkeley Haas energy economist Severin Borenstein says Californians currently pay 30 cents a gallon more than the average state which just might be illegal.

"California really needs to dig into this and find out what's happening and the state government just hasn't seemed interested in digging into it," said Professor Borenstein.

Since crude oil hit a pandemic low of about $30 a barrel, the OPEC oil cartel has rocketed oil back up to $80. 

"And the extra $50 per barrel means another $1.25 or so on our price at the pump," said Borenstein. 

Ridesharing drivers take a huge hit. "When the price of gasoline goes up a dollar or two per gallon, they see that personally in their personal income," said Borenstein.

Here's what one rideshare driver told us back in June when prices were much lower than now. "I pay for gas, $50 a day in gasoline. That's why a lot of drivers, they don't want to keep driving, that's why we are short of drivers," said rideshare driver Hector Castellanos.

Companies with fleets of cars and trucks are feeling it. For example, Bay Cities Produce has a big fleet of delivery trucks. "Our fuel prices just the last year, 14 months have gone up 25%. It's hurt my distance. I cannot expand my growth with the cost of the equipment and the fuel the way it is now," said Steve DelMasso, president of Bay Cities Produce.

Airlines are paying a lot more for fuel but must pay to fly and can and will raise prices, especially when demand is high. "But they also got a huge bailout payment from the government. So, the airlines actually came through this overall OK," said Borenstein.

Rail and ocean shipping are incredibly efficient at hauling massive amounts of good which will have little impact on their bottom lines. But the price they charge shippers have gone up three to 10 times more per container or rail car and you're the one who's paying for it.