BERKELEY (KPIX 5) — A University of California, Berkeley professor is drawing attention to a gasoline “mystery surcharge” in the state – unexplained price increases in gasoline which have cost drivers $20 billion since 2015.
Severin Borenstein, professor at UC Berkeley’s Haas School of Business and former chairman of the state’s Petroleum Market Advisory Committee, has spent several years crunching the numbers, trying to account for the state’s gas prices, some of the highest in the country.
“I’m very confident in the calculations, it’s really basic arithmetic,” said Borenstein.
The surcharges began in 2015, when the refinery explosion in Torrance caused what was expected to be a temporary spike in gas prices, according to Borenstein. However, the surcharge remained ever since.
“Starting in 2015, they were about 40 cents above where you would expect them to be in 2015. And in 2016, ’17, and ’18, they were between 25 and 30 cents higher than what you would expect,” said Borenstein. “In total, that amounts to paying an extra $20 billion in gasoline since February 2015.
“It’s a payment that’s not going to the government, it’s going to the sellers. Where in the distribution chain it’s ending up, we don’t know. It could be it’s going to refiners. It could be that it’s going to the middle men who buy and sell gasoline along the way. The pipeline owners, the distributors, the retailers, all of them, or some of them could be getting some of that $20 billion. And it could be that it’s covering a legitimate cost, but we should find out what that extra cost is, because it wasn’t there for the previous 15 years.”
In January, 19 state legislators sent a letter to Attorney General Xavier Becerra asking him to lead a formal investigation. Becerra has not publicly commented and the state Department of Justice typically does not announce investigations.
“So something is going on the California gasoline market. It could be that there are fewer manufacturers making California gasoline. It could be that it’s become more difficult to import gasoline because of some problem at the ports or with the pipelines or storage tanks. It seems like the state putting in some real resources to find out is well worth it.”
Borenstein estimates that since 2015, each California driver has spent about $500 on the mystery surcharges, which amounts to $11 million per day, and $4 billion per year.
“If that extra cost is due to some government regulation or policy, we need to look into whether that is something we can alter in a way that we don’t have to pay more for gasoline,” he said.