Anti-gouging campaign is good policy, but bad – Orange County Register

California’s top politicians, Vice President Kamala Harris and Gov. Gavin Newsom, have developed similar strategies to offset increases in consumer prices resulting from what they describe as corporate greed – call it California’s anti-gouging strategy.

Vice President Harris has targeted her anti-gouging strategy at grocery stores. Details are sparse, but Harris says her anti-gouging legislation will force grocery stores to lower food prices, even though groceries are said to survive on a slim profit margin.

Governor Newsom’s recent call for a special session of the Legislature to establish more regulations for the fossil fuel industry comes after he pushed through a previous bill to prevent oil price inflation less than two years ago.

Many economists believe that neither Harris’s nor Newsom’s anti-gouging plans will work. There are reasons for price increases, including general inflation, regulation, and supply chain issues. But California’s most famous politicians believe the problem is corporations stealing from the public, and California has a legacy of trend-setting.

Harris’ team says its anti-gouging plan is designed to deal with price increases during emergencies and go after bad actors who take advantage of consumers during such times. However, the anti-gouging plan is worded broadly, suggesting that, once implemented, it will reduce ongoing food costs unrelated to weather or pandemic-type emergencies.

Supply chain problems, labor market problems and, most importantly, inflation – largely fueled by federal spending pushed by the Biden-Harris administration – have contributed to rising food prices. Preventing gouging is not the solution to such problems.

Governor Newsom’s fight against the oil business has been going on for years. He has already managed to support an anti-gouging bill that would create the Division of Petroleum Market Oversight to detect price gouging and potentially ensure that price violators are fined by the California Energy Commission.

However, despite this oversight, gas prices in California are still among the highest in the nation.

The governor’s current plan, currently being discussed in a special session of the Legislature, is to require oil refineries in the state to maintain a callable reserve so that when refineries are shut down for maintenance, there will be enough supply to prevent price increases.

Part of the problem is that there are fewer gasoline refineries in California than there used to be. In California, refineries have been closed in part due to state regulations and operating requirements.

Regulations and taxes in California lead to huge prices at the gas station – taxes are about a dollar per gallon, or about three times the national average. California’s fossil fuel restrictions have limited the amount of oil produced in the state, which means that approximately 75 percent of the oil used by the state comes from foreign sources, and transportation incurs shipping fees. Moreover, the overall high costs of doing any business in the state are passed on to consumers.