Solano gas prices are skyrocketing. Is relief in sight?
Relief debit cards proposed by Governor Newsom — which still have to be approved by lawmakers — likely won't come until later this year, policy analysts say.
Photo: A Chevron station in Dixon offers regular unleaded fuel for at least $6 a gallon. (Photo by Matthew Keys for Solano NewsNet)
Drivers in Solano County are paying some of the highest gas prices in the state, and it will likely remain that way for at least a few more months.
The average price for a gallon of gas is $5.90 per gallon, according to gas station data reviewed by Solano NewsNet on Monday. That is slightly less than the $5.98 per gallon average in California, but above what drivers in Redding ($5.88 a gallon), Fresno ($5.80 a gallon) and Modesto ($5.75 a gallon) are paying.
One reason for the higher gas prices in Solano County: Our proximity to two major metropolitan areas — Sacramento, where gas is an average of $5.96 a gallon, and San Francisco, where drivers are paying an average of $6.21 a gallon. And as the summer months continue, the prices are likely to go up more as holiday travels spurs more demand.
Experts say years of increased oil production to the point of oversupply helped drive gas prices down before the pandemic started. During the pandemic, oil prices plunged even more as commuters traded their offices and work places for long periods at home, largely due to shelter-in-place orders imposed by state and local governments.
Along with the pandemic, Russia’s decision to invade Ukraine and a domestic energy agenda that shifts away from fossil fuel toward electric and other alternate power sources has forced oil companies to abandon their growth-at-any-cost strategy. Instead, oil suppliers are largely reducing their output, which is driving up the cost as supply shrinks and demand grows.
No one can force oil companies to refine more fuel, so politicians are looking for other options.
In California, Governor Gavin Newsom is proposing $11.5 billion in relief checks — which are actually debit cards — as part of his $11 billion budget package that was unveiled last week. The program works like this: Registered vehicle owners who have one vehicle would get a $400 debit card, while vehicle owners with two or more vehicles would get two $400 debit cards.
That money would come out of the state’s $97.5 billion surplus, of which $68 billion is available for general use.
Not everyone is in favor of the relief money: Those who oppose the measure say Newsom should suspend the state’s gas tax, which is 52 cents per gallon, one of the highest in the country.
In February, Newsom proposed temporarily lowering the gas tax to 49 cents per gallon. An analysis of the proposal said the state could lose $523 million if it lowered the gas tax by 3 cents per gallon, but that lost revenue would not impact road improvement projects scheduled between 2022 and 2024. (The analysis was published two weeks before Russia invaded Ukraine, which triggered a spike in oil prices.)
There is considerable debate whether reducing or eliminating the gas tax would provide for any immediate relief in gas prices. Some experts believe gas stations, which have historically offered gas as close to cost as possible and make most of their profit on other services like the sale of convenience store items, will lower gas prices in kind. Others say a gas tax break could drive up demand even more, which will cause prices to rise anyway, especially if people use those relief debit cards to buy more gas than they otherwise would.
At the moment, those relief debit cards are just a proposal: Lawmakers still need to pass Newsom’s budget proposal, a process that takes weeks as elected officials dicker over details large and small.
Details of the relief money plan that still need to be ironed out include how California will use the Department of Motor Vehicles to issue debit cards (Newsom wants a third party to oversee the process; lawmakers are not keen on the idea) and whether there will be an income cap in order to receive them (surprisingly, Newsom’s plan does not include income caps; some lawmakers argue wealthy Californians who do not need the extra help will get the same money as low-income families who need more of it).
Policy analysts say Newsom’s proposal to use the DMV in tandem with a third party is a complicated one that could delay refund debit cards to October or later — meaning drivers wouldn’t get the relief cash until the summer demand period for fuel starts to end. Some lawmakers say Newsom would be better off using the Franchise Tax Board, which is used to sending a large amount of Californians money in the form of tax refunds every year, but Newsom argues the FTB is too busy processing refunds to handle the relief program.
For now, only one thing is certain: Gas prices are high, they’re going to remain high for some time, and any economic relief is still a long ways off.
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