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There was minor improvement in the rankings for natural gas and residential electricity as last year’s rise in natural gas prices began to be reflected in the data, especially for some of the New England states which have failed to invest in the required pipeline capacity to meet their economies’ needs.
In March, gasoline prices in California rose an average of 2.9% as production continued to shift to the more expensive summer formulation. The most recent prices from CSAA show California prices largely unchanged as of April 5, easing 0.4% since the March average to $4.85. US prices (all states including California) are at $3.53, up somewhat higher by 1.8%. As the result of recent OPEC cuts combined with current policies dampening both US and California potential for a production response, prices are likely to resume rising in at least the near term including the pending gasoline and diesel tax increases scheduled for July.
The effect on prices from the new fuels tax hike recently passed in SBX1-2 also remains to be seen. The possible effects are unlikely to be seen for at least the near term due to the complexity of the final version and time lag that will be required for the agencies to staff up for these new duties. Longer term, it also remains to be seen whether this new tax, essentially an experiment in price control, will have the same effect as prior price control measures have had on dampening investment and worsening the supply issues contributing to higher prices in the first place. The causes behind California’s higher gasoline prices—including the highest fuel taxes in the nation, substantially higher and constantly rising regulatory
costs, and the subsequent effect on reducing in-state production capacity—have long been identified by the Energy Commission and repeatedly identified by investigations by previous Attorneys General. The recent legislation does nothing to address these core issues, and instead has the potential to be yet another factor administered independently by yet another agency affecting the overall supply issues that led to last year’s price volatility.
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