Saturday, January 28

Finally, some good California gas price news (really!)


THE BUZZ— OIL OPTICS: California is on track to see a drop in gasoline prices in the coming weeks, just as the world’s leading oil producers announced plans yesterday to cut production by 2 million barrels per day.

It’s not so much that California is insulated from OPEC’s influence, but rather that the factors driving the state’s high gas prices in the first place are expected to calm down in the near future. California’s supply has been squeezed over the last month due, in part, to six oil refineries undergoing maintenance. But experts and analysts say the state’s $6.43 per gallon average may be the peak, as refineries come back online, more supply is imported from out of state and California makes an early transition to winter blend gasoline.

“I think, by next week, we will have dropped probably 50 cents a gallon… I think we’re gonna see it turn around very quickly,” said Severin Borenstein, faculty director of the UC Berkeley Energy Institute at Haas. Another analyst, Patrick De Haan, noted that California’s spot prices fell $1.25 per gallon on Wednesday, a likely harbinger of lower prices at the pump.

With that drop in prices on the horizon, California drivers aren’t likely to notice any increase from OPEC’s decision, Borenstein said, which could take weeks to show up at gas stations anyways. The California Energy Commission said Wednesday the OPEC decision is equivalent to about a 1 percent cut in supply, and expected to have a “relatively modest impact on the price of gasoline in California.”

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Nevertheless, concerns about what (or, perhaps, whom) is driving high gas prices continues to be a focus of the political class. Democrats across the country are worried about how it could affect their chances in the midterms, and Republicans in California are using the high prices as a line of attack in battleground races.

Gov. Gavin Newsom last week called for the Legislature to pass a windfall tax on oil companies, which, he said, need to provide an explanation as to why gas prices are so high and should be held responsible for “fleecing” customers. His office yesterday again pointed out that the price for consumers rose in September despite the price of crude oil falling. California Energy Commission Chair David Hochschild similarly put out a statement Wednesday saying refinery issues don’t fully explain the high cost of California gasoline.

Passing a windfall tax (which some lawmakers tried and failed to do this year) would require Newsom to either call a special session or wait until January when the Legislature reconvenes, which would delay relief that much further.

The prospect of a special session also presents plentiful pitfalls for Democrats. Passing a tax in an election year would potentially give more cannon fodder to their Republican opponents. Then there’s the issue of speakership politics — Assemblymember Robert Rivas (D-Salinas) is still very much vying for Speaker Anthony Rendon’s job, and those dynamics could make it difficult for the caucus to unite and pass legislation under a time crunch.

BUENOS DÍAS, good Thursday morning. Opponents of Proposition 1, the initiative to enshire abortion rights in the California Constitution, are expected to gather at the Capitol this morning. Speaking of conservative causes, Republican donors are gathering in Orange County tonight for a fundraiser scheduled to feature NRSC chair Sen. Rick Scott and U.S. Senate candidates Mehmet Oz and Adam Laxalt.

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Programming Note: We’ll be off this Monday for Indigenous Peoples Day but will be back in your inboxes on Tuesday.

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QUOTE OF THE DAY: “Let’s be clear: Selling drugs is not legal. Using drugs out in the open is completely unacceptable.” San Francisco Mayor London Breed once again pledging to crack down on open drug use and sales on Wednesday, via the Associated Press. 

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