California — with the highest gas taxes in the nation — investigating 'mystery surcharge' at the pump

California Gov. Gavin Newsome (D) believes his state's sky-high gas taxes aren't to blame for the price disparity citizens pay at the pump compared to other Americans, and has instructed the state's attorney general to investigate a so-called "mystery surcharge" — which he says can likely be attributed to price fixing or misleading practices by "big oil."

What are the details?

Gov. Newsome wrote a letter to California Attorney General Xavier Becerra on Monday, asking Becerra to "open an investigation into whether false advertising or price fixing are occurring and contributing to the mystery surcharge imposed on Californians."

The governor enclosed a report he had requested last year from the California Energy Commission, which concluded that "the primary cause of the residual price increase is simply that California's retail gasoline outlets are charging higher prices than those in other states." The report acknowledged, however, that "the CEC does not have any evidence that gasoline retailers fixed prices or engaged in false advertising."

The Commission went on to admit that it "lacks the expertise to determine whether such behavior occurred," and therefore called on the California Department of Justice to validate its claims.

The CEC's analysis also includes a series of bar graphs to show the spike in prices California consumers pay in relation to the rest of the nation, including the drastic jump seen in the state's gas taxes in 2018.

Image source: California Energy Commission analysis on Gasoline Prices in California, October 21, 2019

Anything else?

Apparently, Gov. Newsome and the CEC either did not consult with or ignored analysis from their state's free-market think tank, the Pacific Research Institute, which provided an explanation for the state's hefty gas prices just last week.

PRI's Tim Anaya wrote, "the real reason we're paying so much more [at the pump] is high taxes and expensive regulations imposed by Sacramento politicians," explaining that "Californians now pay 80.45 cents per gallon in total federal and state gasoline taxes (including federal and state excise taxes)."

According to Anaya, cost-conscious Californians should prepare themselves for worse. He added, "as part of California's efforts to address global warming, the state's low carbon fuel standard currently adds around 16 cents per gallon to the price of gas. And these prices will increase. A December 2018 report by California's nonpartisan Legislative Analyst's office predicts that the low carbon fuel standard will increase to approximately 46 cents per gallon by the year 2030."