Posted on 09/01/2005 9:40:53 AM PDT by NormsRevenge
SAN FRANCISCO (AP) - Criticizing oil industry profits, a California lawmaker has introduced legislation to give a state agency broad authority to regulate the cost of fuel.
California and Hawaii, which was the first state to introduce price caps for gasoline, have the highest per-gallon costs for gas in the nation.
Sen. Joe Dunn, D-Garden Grove, introduced a constitutional amendment this week that would allow the state Public Utilities Commission to require mandatory fuel reserves, set profit margins for oil and gas companies, and order the construction of new pipelines. His measure also would forbid agreements between companies that reduce competition. The PUC also could cap prices, but only as a last resort, Dunn said.
In an interview Wednesday, Dunn accused the petroleum industry of creating a dysfunctional market in California, where competition has been all but eliminated. Only by giving the state regulatory power, Dunn said, would the industry change its behavior.
"Two years ago, when gasoline cost $2 a gallon, the industry said to give it time and prices would settle down. Now, we're seeing $3 a gallon," Dunn said. "People in California are no longer believing the excuses of the industry. If they can't fix their market behavior, we'll fix it for them."
Dunn's bill, introduced Tuesday, is modeled on legislation passed in Hawaii in 2002 that allowed the state to set price caps on gasoline.
David Fogarty, a spokesman for the Western States Petroleum Association, said the California proposal does not take into account the high price of crude oil, which accounts for 60 percent of the cost of gasoline. California's high gas taxes and strict pollution control regulations also boost the price of gas in the state, Fogarty said.
"If you look at gas prices, compared to health care, housing and food, gas prices haven't gone up nearly as much," Fogarty said. "We understand that people are concerned. But generally, the market does treat consumers well."
The average price of regular unleaded Wednesday in California was $2.869 a gallon, compared to the national average of $2.745.
A statewide Field Poll released Wednesday found that more than 70 percent of Californians consider gas prices a serious matter, and many are cutting spending in other areas as a result.
Gas prices, which climbed throughout the summer, have jumped further still in the aftermath of Hurricane Katrina, which damaged or destroyed refineries and pipelines in the Gulf of Mexico.
President Bush said Wednesday he would allow millions of gallons of gas to be released from the Strategic Petroleum Reserve to ease the crunch but warned consumers to expect to pay more at the pump in coming days.
"Our citizens must understand the storm has disrupted the capacity to make gasoline and distribute gasoline," Bush said.
California Gov. Arnold Schwarzenegger also responded to concerns about gas prices Wednesday, saying he had no authority to regulate them.
"It's supply and demand," Schawarzenegger said at an event in Long Beach. "... If there is a lot of demand, the prices will go up. It's just one of those unfortunate things."
Schwarzenegger, who has famously promoted gas-guzzling Hummers, urged Californians to drive less and consider carpooling.
Dunn and other consumer advocates have railed against the record-high profits oil companies have enjoyed in recent months. Since the end of 2003, the four largest companies - Royal Dutch/Shell Group, BP Group PLC, Exxon Mobil Corp. and ChevronTexaco Corp. - have earned a combined $97 billion, including $23 billion during the first three months of this year.
Industry representatives argue that while the sheer numbers are large, the oil industry's profit margin - the percentage pocketed from each sale - isn't huge.
In the first quarter, the oil and natural gas industry's profit margin averaged 8.5 percent, according to figures compiled by the American Petroleum Institute. The average profit margin for all industries so far is 9.2 percent, according to Business Week's calculations.
They haven't learned yet....
Are all the dems on mind altering drugs or hoping the sane among us are short on memory?
Regulating will cause shortages. It's that simple.
Keep our prices down, and the refineries will send product out of state where they can charge what the market will bear.
Oh, that will help a lot. They'll be so popular with California's freeway commuters!
I need to think of some product that can be sold to californians waiting in gas lines...
No. He's regulating the PRICE of fuel. He's not doing a damn thing about the cost of producing it, only the PRICE at which it's sold.
Dunn is Dumb.
is an idiot. I'm sure he would vote to restore nuclear energy to California or permit offshore drilling - NOT! Another fool that doesn't seem to understand the simple economics of supply and demand...so go ahead Joe, you stupid twat, set ceilings on profits for oil companies and watch how much gas California gets at all in the future...dumbass!!
Joe Dunn has never met a business he hasn't wanted to regulate.
Socialist dimwit. The growing conservative asian population in Garden Grove will hopefully send this man his walking papers next election.
Dimwit is right. But most Californians will probably lap up this swill.
First they make life miserable for the power companies, so they stop building. Then they bankrupt the state trying to compensate by buying out of state power.
Now they want to chase out the energy companies. Maybe they think they can feed CA's oil jones by speculating in oil futures on the NYMEX.
The legislature proved its worth already ! (in regulating electricity)
First of all, it does not matter what end of the economic equation you try to regulate. Prioces are always, repeat always, a function of supply and demand.
Try to regulate the price, you hold it below market clearing levels and demand exceeds supply - a shortage.
Try to regulate "cost" - however defined - you end up with reduced supply, and higher prices.
To be honest, I hope these clowns in California get their way and MANDATE a gasoline price ceiling of $1.50 per gallon. Why? Because NO ONE will ship any gasoline to California - the increase in supply to the rest of the country will dramatically reduce everyone elses prices.
I say let theses socialist bastards be hoisted by their own petard.
Thats what I thought.
broccabrellas!
I think Old Joe is termed out.
Pass the popcorn.
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