Does new CA law cracking down on price gouging at the gas pump mean lower prices for you?

Amanda del Castillo Image
Tuesday, June 27, 2023
New CA law cracks down on price gouging at the pump
A new California law is now in effect cracking down on price gouging at the pump. Could this mean cheaper gas prices for you?

DUBLIN, Calif. (KGO) -- California is cracking down on price gouging at the gas pump. The governor's office is touting the new state law as a model for the nation, saying California is stepping up oversight and accountability on the oil and gas industry.

ABC7 News was in Dublin on Tuesday morning, where we found the Bay Area's cheapest gas prices.

Even more promising, California is no longer the state with the most expensive gas prices. Washington surpassed us last week.

However, petroleum analysts explained the law doesn't exactly mean lower prices at the pump.

MORE: California no longer has the most expensive gas prices in the country

Either debit or dollars will get you a $4.09 gallon of gas at the Safeway fuel station off Dublin Boulevard. The location offered one of the cheapest gas prices in the Bay Area as of Tuesday morning.

And now, there is an added layer of protection at the pump as the governor, in a video posted online, pointed to delivering on a promise to hold Big Oil accountable.

"This is just the start," Gov. Newsom shared. "We're standing up the nation's first Big Oil watchdog to monitor the industry 24/7, rooting out illegal price gouging in real time, helping you keep money in your pocket."

The new state law is written to expose price manipulation in real time by requiring daily reports on the market and imports. It's meant to help prevent spikes caused by refineries going offline. It now requires monthly reports on refiners' profit margins. Even more, it establishes a new independent watchdog called the Division of Petroleum Market Oversight within the California Energy Commission.

These are measures the Head of Petroleum Analysis at Gas Buddy said won't exactly equate to lower gas prices at the pump.

"Keep in mind, prices move for myriad reasons, right? Somebody can basically sneeze today or if there's a major issue at a refinery or oil producer, that's going to drive the market," Gas Buddy's Patrick De Haan told ABC7 News. "But when it comes down to it, this piece of legislation is not a needle mover. It's simply uncovering what a lot of people don't know about. People like me that get to see these numbers, and basically explain to people what is going on."

Still, De Haan says transparency is always good.

Instead, he said prices are driven by the market; supply and demand.

"What the governor has not often cited is economics decide prices," De Haan added. "Just like expensive homes in California. There's not really one person in charge of setting the market price for homes, it's a market based price that's determined by how many buyers there are and how many sellers there are."

He continued, "Gasoline is very similar to that."

MORE: Newsom proposes measure to crack down on price gouging by oil companies

Still, drivers are hopeful, hearing about the added protection at the pump. Many are keeping their eye on future impacts.

"We have to see what are going to be the effects of the gas gouging prevention. But technology is in favor of us so I recommend everybody to use the app and find the cheapest gas prices in the area," said Bay Area resident and driver Marcelo Dominguez.

A year ago, drivers were paying an average of $6.30 a gallon. Today, we're $1.50 below that.

The Western States Petroleum Association released the following statement to ABC7 News:

"California's oil and gas industry has provided the state detailed, real-time data under the most rigorous petroleum industry reporting laws anywhere in the nation. This information has long painted a clear picture about the need to update California's outdated fuel supply infrastructure and avoid systemic problems that can impact prices at the pump.

We look forward to working with the Energy Commission to implement SB X1-2 and holding the governor, the legislature and state regulators accountable for ensuring that the supply of transportation fuels is affordable, reliable, equitable, and adequate to meet the needs of all Californians."

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