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    News

    Assemblywoman Oropeza Holds Hearing On Soaring Gasoline Prices


    Oropeza gas price hearing, 3/26/04
    Photo: Assemblywoman Oropeza web site

    (March 28, 2004) -- Assemblywoman Jenny Oropeza (D., LB-Carson, in photo center), newly named chair of the Assembly Transportation Committee, held a March 26 legislative hearing in Los Angeles to discuss rising gasoline pump prices that have already topped $2.00 a gallon in much of CA as national prices reach record levels of roughly $1.80/gallon.

    In addition to Assembly Transportation Committee members Dennis Mountjoy (R., Monrovia, right) and Jay LaSeur (R., La Mesa, not pictured), state Senator Joe Dunn (D., Garden Grove, left of photo) and Assemblywoman Jackie Goldberg (D., LA, next to Dunn) also took part in the hearing at MTA's L.A. HQ.

    Those in the audience included staff from the offices of U.S. Senator Dianne Feinstein and L.A. County Supervisor Yvonne Burke.

    Some excerpts:

    Assemblywoman Oropeza [opening statement]: ...Prices have risen sharply throughout the nation but have become particularly outrageous here in California...They have suddenly sort of stabilized in a sense, in a frightening way, at above $2.00. We've heard warnings that by Labor Day they may rise as high as $3.00, and this is absolutely a frightening element that consumers in our state are facing...And this is indeed affecting every family and many, many businesses in our state...

    [While some factors are not within CA's control], other factors that may appear to be strictly national in nature, like federal mandates, strategic oil reserve deposits and the like, actually can and may be affected by the legislature and other governmental entities here in CA...

    But most importantly, there are factors that are directly under our control or influence, such as differential pricing policies, the timing of refinery shut downs, and the mix of company owned versus independent stations...

    ...As chair of the [Assembly] Transportation Committee, I am personally committed to bringing all appropriate and relevant powers of state government to bear to seek a ready supply at an affordable price for CA's consumers...

    Anita Mangels: [Western States Petroleum Ass'n spokesperson]...The Western States Petroleum Association is not a producing organization. We don't produce refine, sell or otherwise involve ourself in the marketing of petroleum products. We're a non-profit trade association representing not only the major refiners but many other petroleum affiliated businesses throughout the six western states...

    ...We talk about the increase in the price of gasoline. It's interesting to note when adjusted for inflation, it's actually less today than it was twenty years ago. This is an Energy Information Administration figure from the federal government. In 1981, we paid $1.35 on average per gallon. Adjusted for inflation this would be equivalent to $2.70 or twice as much today...

    ...According to the Energy Information Administration, on average when you buy a gallon of gas at the pump, crude oil...is almost half of the price, 48% at the pumps attributable on average to crude oil.

    Taxes in California, we pay the fourth highest taxes in the nation on gasoline at the pump. That's 27%, so right off the bat you've got 3/4 of the price of your gallon of gas attributable to the cost of crude and taxes which in California are higher than almost anywhere else in the country.

    Distributing and marketing, 10%; refining cost, 16%...

    ...Taxes, costs of doing business, insurance costs, compliance costs, employee benefits, you name it, it's all in there, not to mention the technical investments, the operating costs that go up each and every day because of CA's increasingly stringent regulatory climate. Folks may not like to hear that. It's certainly not as entertaining as hearing conspiracy theories and twenty-year old memos...but it's a fact of life...

    ...Why are CA prices generally higher than the rest of the country? First of all...the cost and challenges of producing our gasoline here in CA are significant...We pay more, yes, but we also have the cleanest gasoline on the planet...It means we have much cleaner gas, much cleaner air, much healthier climate, but we do have to pay more. It also means that because we're the only market that uses this gas, folks outside of CA typically don't produce it. Why? Because they don't have the market...

    Senator Dunn, who in 2003 proposed amending CA's constitution to give the Public Utilities Commission jurisdiction over entities that own, operate, control, or manage the production, generation, transmission, or furnishing of gasoline, drew analogies between the market situation for gasoline and that of electricity when prices soared. He urged that witnesses at subsequent hearings testify under oath...and that industry representatives waive their attorney-client privilege to give investigators access to documents, if any, related to market behavior.

    Assemblyman LaSeur said at the conclusion of the hearing, "I think it would be a good thing if we in fact have some people testify under oath, I would really like to find out about the profits that have been made and where they've going, and I'd like to subpoena some records too."

    Senator Mountjoy added:

    I agree with Senator Dunn about sworn testimony. In Sacramento, what we say on the floor and what we say in committee isn't sworn testimony and there's no obligation to tell the truth. Things would be a lot different there if that was the situation, and I think if we're going to be armed with the information to solve the problem for the people, sworn testimony is absolutely essential. We've made a lot of correlation between Enron and this crisis. I'm not here to defend Enron, but when the problem with Enron happened, it was a highly regulated industry by the state of CA when it occurred, so I'm very hesitant to get the state of CA in the gas and fuel business as well...But if there is true gouging coming from these suppliers, then we have a responsibility to the people of CA to end that as soon as possible...

    Senator Dunn responded:

    There was no regulated oversight of the market behavior of the energy producers and that is exactly what was the major cause of our electricity crisis was. And I also want to echo my original comments...that for the legislature to truly get to the bottom of this, it must exercise its subpoena power both as to documents and to depositions and to testimony before the committee, as well as to employ the use of the oath...Like Enron, real evidence of market disfunction didn't come forward until the attorney-client privilege was waived as to documents relating to market behavior. I encourage this industry, if it truly believes that market disfunction is not a cause of our gasoline price volatility, to make the same waiver of the attorney-client privilege...

    Assemblywoman Oropeza indicated at the outset of the hearing that she has scheduled a hearing in Sacramento on April 1, with others likely forthcoming, to "try and identify and hone in on concrete steps that can be taken by the state legislature or other state entities to harness these gasoline prices and make an attempt to not only stabilize them but perhaps lower them." She added:

    In an automobile dependent state...volatile fuel prices can wreak havoc with family finances, corporate balance sheets and the regional economy...It seems clear that the eventual solution to this problem lies in addressing our over-dependence on petroleum based fuel, but we cannot in the short term simply wait for the day when our vehicle fleet operates on alternative fuels. Motorists rightly demand and the state's economy dictates that we take all possibly steps today to moderate these debilitating price spikes.

    As previously reported by LBReport.com, Assemblywoman Oropeza introduced legislation in late February 2004 to increase CA's gas tax by five cents per gallon and announced plans to review the state gasoline tax.

    "Liz Hill, the states non-partisan Legislative Analyst, last week [mid-Feb] called for a 6-cent hike and I believe we need to examine this issue...Therefore I've introduced a bill calling for a 5-cent per gallon hike," Oropeza said in a February 25, 2004 release, adding "Stable transportation funding is the key to a strong economy."


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