ALL RIGHT, UH, I WOULD LIKE TO.
AH NOW CALL THIS HEARING OF THE
ASSEMBLY COMMITTEE AND UTILITIES
ENERGY AND THE FIRST
EXTRAORDINARY SESSION. THE ORDER
. WE'RE HERE FOR AN INFORMATION
OR HEARING TO DISCUSS THE ISSUE
OF HIGH AND VOLATILE GASOLINE
PRICES IN CALIFORNIA. AS WELL AS
THE GOVERNOR'S PROPOSAL TO
ADDRESS THIS ONGOING CONCERN.
SOME OF OUR PANELISTS WILL BE
PARTICIPATING REMOTELY. I WILL
MAINTAIN THE QUORUM AS WE
NORMALLY DO HERE TO AVOID ANY
DISRUPTIVE CONDUCT. YOU MAY BE
REMOVED IF THE CHAIR DEEMS THAT
YOU'VE BEEN DISRUPTIVE. UM, IN
THIS HEARING. BUT ALSO LIKE TO
TAKE THE MOMENT WE WILL HAVE
SOME MEMBERS THAT ARE NOT PART
OF THE COMMITTEE JOINING US
ALONG THE WAY, AND SO, UM,
WELCOME THEM BEFOREHAND. FOR
DECADES. CALIFORNIA'S HAVE SEEN
GAS PRICES RISE FLUCTUATE
WILDLY. HIGHER GASOLINE PRICES
CAN BE PARTICULARLY CRIPPLING
FOR RESIDENTS ON FIXED OR
LIMITED INCOMES AND THOSE WHO
HAVE LONG COMMUTES TO WORK
REQUIRED DRIVING AS PART OF
THEIR JOB. WE'RE HERE TODAY TO
EXAMINE ASPECTS OF GASOLINE
PRODUCTION, THE LACK
TRANSPARENCY AND MAY BE
CONTRIBUTING TO HIGH GASOLINE
PRICES. WE WILL ALSO DISCUSS
POLICY PROPOSALS FOR WAYS TO
INCREASE TRANSPARENCY AND
STABILIZED GAS PRICES. THAT
CONVERSATION WILL PROVIDE. THIS
CONVERSATION WILL PROVIDE A
FORUM FOR MEMBERS OF THE
COMMITTEE TO DISCUSS ASPECTS OF
THE GOVERNOR'S RECENTLY AMENDED
PROPOSAL. SBX ONE HAS TO
PROPOSAL PROMISES TO INCREASE
TRANSPARENCY AND GASOLINE
PRICING AND EMPOWER THE CC TO
ESTABLISH A PENALTY ON WOULD
FALL PROFITS IN THE OIL AND GAS
INDUSTRY. WE'RE JOINED TODAY BY
REGULATORS, MARKET EXPERTS,
INDUSTRY REPRESENTATIVES AND
CONSUMER ADVOCATES. THEY WILL.
EACH PROVIDE PERSPECTIVES ON THE
STATE OF THE GASOLINE MARKET IN
CALIFORNIA AND POLICIES TO
ADDRESS HIGH GASOLINE PRICES.
WITH THAT. I'D LIKE TO TURN TO
ANY OF MY COLLEAGUES WHO WOULD
LIKE TO MAKE ANY OPENING
REMARKS. LOOK TO MY RIGHT. MY
LEFT. PLEASE. THANK YOU, MR
CHAIR. I'M GRATEFUL FOR THE
OPPORTUNITY TO DISCUSS THE
GASOLINE PRICE VOLATILITY AND
HIGH GAS PRICES PAST YEAR WE
HAVE BEEN HEARING FROM OUR
CONSTITUENTS ON THIS HIGH CROP
COST OF GASOLINE. MY OFFICE
RECEIVED A LETTER EARLIER THIS
WEEK INDICATING THE CALIFORNIA
REFINERIES. PROFIT PROFITS WERE
30% GREATER COMPARED TO ANYWHERE
ELSE IN THE WORLD. IT ALSO
INDICATES THAT IN THE FIRST
THREE QUARTERS OF 2022
CALIFORNIA'S FIVE BIGGEST
REFINERS. CHEVRON MARATHON PBF
ENERGY ENERGY PHILLIPS 66.
VALERO BROUGHT IN $67.6 BILLION
IN PROFITS NEARLY FOUR TIMES THE
SAME PERIOD DURING THE SAME
PERIOD IN THE PRIOR YEAR. THESE
PROFIT MARGINS SEEM ASTRONAUT
ASTRONOMICALLY HIGH AS
CALIFORNIANS WERE PAYING AS MUCH
AS $2.60 MORE THAN THE AVERAGE
AMERICAN. IT'S CLEAR THAT
THERE'S A DISCREPANCY BETWEEN
WHAT CALIFORNIANS ARE PAYING
COMPARED FOR COMPARED TO THE
REST OF THEIR NATIONAL PEERS. I
LOOK FORWARD TO HEARING FROM THE
PANELISTS AND DISCUSSING THE
GOVERNOR'S PROPOSAL SO THAT OUR
CONSTITUENTS ARE NOT PRICE
GOUGED. THANK YOU. THANK YOU.
SOME MEMBER RAISE. SHARING THAT
PERSPECTIVE, AS WE WILL HEAR
FROM A WIDE RANGE OF
PERSPECTIVES ON THIS PANEL THAT
WILL BE COMING UP. I WILL ASK
THAT ALL THE PANELS PROVIDE
THEIR OPENING STATEMENTS, THEN
WE CAN TURN TO THE COMMITTEE FOR
QUESTIONS WILL START.
COMMISSIONER SIVA GUNDA, VICE
CHAIR OF THE CALIFORNIA ENERGY
COMMISSION, AND I'D ASKED
EVERYONE WHO IS ON THE PANEL. IF
YOU'LL PLEASE JOIN US UP AT THE
FRONT. FOR EFFICIENCY PURPOSES.
THANK YOU. YOU MAY BEGIN. THANK
YOU, CHAIR. UM. GOOD AFTERNOON
CHAIRS AND MEMBERS OF THE
COMMITTEE UGANDA VICE CHAIR OF
THE CALIFORNIA ENERGY COMMISSION
FOR THE RECORD. THANK YOU FOR
HOLDING THIS IMPORTANT HEARING
AND FOR THE OPPORTUNITY TO
PROVIDE YOU WITH THE DETAILS OF
THE GOVERNOR'S PROPOSAL FOR
BRINGING GREATER OVERSIGHT AND
ACCOUNTABILITY TO GASOLINE
PRICING. A C U. C HAS A CRITICAL
ROLE IN THE GOVERNOR'S PROPOSAL
. AND TODAY I HOPE TO PROVIDE
YOU WITH THE BACKGROUND
INFORMATION ON THE RATIONALE FOR
THE GOVERNOR'S PROPOSAL AND HOW
IT WILL PROVIDE MORE
TRANSPARENCY AND OVERSIGHT INTO
CALIFORNIA'S PETROLEUM MARKET TO
PROTECT CALIFORNIA CONSUMERS.
NEXT SLIDE, PLEASE. IN 2022
GASOLINE PRICES ATTRACTED
CALIFORNIA GASOLINE PRICES
ATTRACTED NATIONAL ATTENTION ON
OUR RELATIVE TO THE REST OF THE
U. S. THE CHART HERE SHOWS THE
AVERAGE RETAIL GASOLINE PRICES
IN CALIFORNIA IN GREEN AND THE
U. S IN BLUE. AND I WOULD LIKE
TO POINT OUT HIGHLIGHT A FEW
ELEMENTS OF THE GRAPH FOR YOUR
CONSIDERATION. ONE. PRICES BOTH
NATIONALLY AND IN CALIFORNIA,
TRACK VERY CLOSELY WITH THE
PRICES OF THE CRUDE OIL. WHICH
ARE GLOBALLY INDEXED AT THE
GLOBAL AS THE GLOBAL CRUDE OIL
PRICES GO UP AND DOWN THE RETAIL
PRICES FOLLOW GASOLINE PRICES IN
CALIFORNIA HAVE BEEN SOMEWHAT
HIGHER ON AVERAGE THAN THE REST
OF THE UNITED STATES FOR A FEW
REASONS, INCLUDING ENVIRONMENTAL
PROGRAMS AND OUR UNIQUE FUEL
BLEND. HISTORICALLY THE
DIFFERENCE BETWEEN CALIFORNIA
AND THE U. S. GASOLINE PRICES
WERE STABLE AND AS YOU SEE THAT
THE TWO PRICES USED TO TRACK
CLOSELY IN HOW THEY MOVE UP AND
DOWN SINCE THE TORRANCE REFINERY
INCIDENT IN 2015, HOWEVER, THE
DATA SUGGEST TWO PHENOMENA. ONE
THE DIFFERENCE BETWEEN THE
CALIFORNIA AND THE U. S GASOLINE
PRICES BEGIN TO GROW AND TO
THERE ARE TIMES OF PRICE BIKES
IN CALIFORNIA THAT DIVERGE FROM
THE NATIONAL TRENDS
SIGNIFICANTLY, WE HIGHLIGHT
THREE SPIKES ON THE CHART IN
2015. WE HAD A PRICE SPIKE
FOLLOWING THE TORRANCE REFINERY
INCIDENT. THE SECOND HIGHLIGHTED
IN 2019 RESULTED IN GOVERNOR
NEWSOM ASKING THE ENERGY
COMMISSION TO DEVELOP A REPORT
AND RESPOND TO THE EXPERTS
RAISING THE CONCERNS OF THE
MYSTERY SURCHARGE. FINALLY, THE
THIRD EXTRAORDINARY SPIKE IN
PRICES WE SAW LAST YEAR, WHICH
WE WILL DEVELOP INTO MORE IN THE
NEXT FEW SLIDES. NEXT SLIDE,
PLEASE. TAKING A CLOSER LOOK AT
JUST THE DIFFERENCE BETWEEN
CALIFORNIA AND THE U. S. RETAIL
PRICES. THE RED LINE IS THE
DAILY DIFFERENCE, AND THE BLUE
LINE STEP CURVE IS THE ANNUAL
AVERAGE WITH A SPECIFIC HERE. AS
YOU SEE THERE, THE DAILY CHANGES
ARE MUCH MORE NOISY THAN THE
ANNUAL AVERAGES, WHICH MASK THAT
AS NOTED BEFORE THE ANNUAL
AVERAGE DIFFERENCE CONTINUES TO
GROW. IN 2015 2014. THE
DIFFERENCE WAS 40 CENTS, AND IN
2021, IT GREW TO A DOLLARS 14
CENTS. ON OCTOBER 4 2022. WE
REACHED AN ALL TIME HIGH
DIFFERENCE OF $2.61, MUCH OF
WHICH DIFFERENT WAS DRIVEN BY
THE REFINERY MARGINS AS WE'LL
SHOW YOU ON THE NEXT SLIDE. THE
RECURRENCE OF THE SPIKES AND
THEIR EXTRAORDINARY HIGH LEVEL
TO THE CONCERN AND WE PRESENT TO
YOU IN THE NEXT SLIDE OF
BREAKDOWN AT CONTRIBUTING
FACTORS. THE NEXT SLIDE, PLEASE.
THE GRAPH GIVES YOU, UM AS MORE
FOCUSED VIEW ON THE DEFINITIVE
MARGINS OR THE PAST DECADE. WE
CAN SEE THAT THERE HAVE BEEN
TREMENDOUS SPIKES IN THE GROWTH
REFINING MARGIN. THE LINEAR
TREND IS MUCH LOWER, WHICH
REALLY HIGHLIGHTS THE POINT AT
WHICH THE REFINER MARGIN SPIKED.
THE GOAL OF THE GOVERNOR'S
PROPOSAL IS TO ADDRESS THESE
EXTREME SPIKES IN PRICING. THE
BILL PROVIDES THE CCV DATA. WE
CURRENTLY NEED TO UNDERSTAND
THIS HIKES IN PRICES AND CHARGES
THE CEASE ITS SCRUTINIZING THIS
FURTHER AND DETERMINING WHETHER
AND WAIT TO SET A MAXIMUM MARGIN
AND PENALTY. NEXT SLIDE, PLEASE.
HERE IS A BREAKDOWN OF THE
CALIFORNIA GASOLINE PRICES IN
TERMS OF COMPONENTS WE CAN
DISCERN FROM THE DATA. WE
CURRENTLY HAVE ACCESS TO
CONSISTENT WITH THE CEASES
APPROACH. SINCE 2019 WE BREAK
THE RETAIL PRICES INTO FOUR
COMPONENTS THAT ALIGN WITH THE
STAGES OF GASOLINE PRODUCTION.
AS YOU CAN SEE RURAL PRICES AND
TAXES AND FEES. REMAIN FAIRLY
CONSTANT. OR EVEN DECREASED OVER
THE 10 WEEK PERIOD AND DID NOT
CONTRIBUTE TO THE PRICE BIKES.
IN FACT, THE DETAILED PRICE
CONTINUE TO GROW AS THE CRUDE
OIL PRICES DECLINED BETWEEN
AUGUST AND OCTOBER. THE DRIVER
OF THIS PRICE BIKE WAS THE
DEFINITIVE MARGINS AND THE
REFINERY REFINERY MARGINS AND
RETAIL MARGINS. YOU SEE THAT
REFINERY MARGINS QUADRUPLE,
GROWING FROM 64 CENTS TO $2.48
BETWEEN AUGUST 29TH AND OCTOBER
3RD. YOU ALSO SEE ABNORMALITIES
IN RETAIL MARGINS. NEXT SLIDE,
PLEASE. ANOTHER FACT THAT
INFORMS POLICY IN THESE AREAS IS
DEMONSTRATED WITH DECLINE BY THE
DECLINE IN DEMAND. THE SEAS.
HE'S STILL COLLECTING DATA FOR
2022, BUT ANALYSIS SHOWED THAT
THE DEMAND FOR GASOLINE
CONTINUES TO DECLINE SINCE ITS
PEAK IN 2017, WHICH IS PARTLY
DUE TO THE SHIFT TO E. V S ON
ELECTRIC VEHICLES. CCS
FORECASTING SUGGESTS THAT THE
CALIFORNIA LIKELY HAS PASSED ITS
PEAK GASOLINE CONSUMPTION
LEVELS. EVEN WITH THESE
DECLINING LEVELS, THOUGH,
CALIFORNIA IS STILL THE THIRD
LARGEST MARKET FOR OIL BEHIND
THE U. S AND CHINA AND CONTINUES
TO BE A PRETTY LARGE MARKET FOR
THE OIL INDUSTRY. NEXT SLIDE,
PLEASE. GIVEN THE TRANSITION IN
THE TRANSPORTATION SECTOR, IT IS
IMPORTANT THAT THE STATE TAKES
ACTIONS TO ENSURE THE CALIFORNIA
CONSUMERS ARE PROTECTED. THERE
IS A LACK OF COMPLETE
TRANSPARENCY INTO HOW THE
REFINING INDUSTRY OPERATES
TODAY. THE C C COLLECTS DATA
FROM REFINERS AND THIRD PARTY
SOURCES, BUT IT DOES NOT ANSWER
CRITICAL QUESTIONS ON WHY PRICE
SPIKES OCCUR AND HOW SUPPLY WILL
BE AFFECTED BY VARIOUS EVEN SUCH
AS REFINERY OUTAGES. THERE ARE
MARKET PARTICIPANTS THAT
UNDERTAKE THIS BUYING AND
SELLING EVENTS. TRANSACTION
LEVEL DATA WOULD PROVIDE
VALUABLE INSIGHTS INTO PRICE
PRESSURES AND PROFITS,
POTENTIALLY AND HELP US
UNDERSTAND NOT JUST AFTER THE
FACT PRICE AND CAPACITY
CORRELATIONS. AND NOT JUST THE
CORRELATIONS OF SPIKING PRICES
AND GLOBAL CORPORATE PROFITS,
BUT THE BUYING AND SELLING
EVENTS ACTUALLY OCCURRING DURING
THE PRICE SPIKES. REQUIRED.
REPORTING OF THIS DATA WOULD
ALSO PROVIDE A STRONG DETERRENT
TO PRICING MISCONDUCT. THE PRICE
SPIKE EVENTS THEMSELVES NEED TO
BE UNDERSTOOD MORE AND
AMELIORATED BECAUSE THE
TRANSITION AWAY FROM GASOLINE
BASED TRANSPORTATION IS GOING TO
FURTHER DISRUPT THE HISTORIC
MARKET AS WE PLAN SESSION FROM
150 YEARS, DEPENDENCE OF OIL TO
CLEAN ENERGY AS NOTED THE
DECREASE IN COMPETITION IN THE
DEFINING SECTOR IS SOME
SOMETHING A TRANSITION PLAN AND
LONG TERM SOLUTION HAS TO
CONSIDER AND MARKET INCENTIVES
TO MITIGATE PRICE BIKES DO NOT
EXIST. INDUSTRY GENERALLY ADMITS
THAT FUTURE PRICE SPIKES WILL
OCCUR. AND THAT THOSE PRICE
SPIKES DO RESULT IN LARGE
PROFITS FOR THE INDUSTRY. AND
THEY HAVE NOT DEVELOPED A
STRATEGY TO PROTECT CONSUMERS
FOR HIGH PRICES AT THE PUMP.
NEXT SLIDE, PLEASE. BEFORE THEY
GO INTO THE GOVERNOR'S PROPOSAL
. IT IS IMPORTANT TO NOTE THAT
THE CC UNDER EXISTING PIRA
AUTHORITY COLLECTS AND REPORTS
IN AGGREGATE INFORMATION ON
PETROLEUM SUPPLY AND HAS
EXPERIENCE IN PROTECTING
CONFIDENTIAL DATA AND TAKES
EXTREME CARE IN HANDLING IT.
PILOT EXPECTIONS. KEEP THIS
SENSITIVE INFORMATION
CONFIDENTIAL AND IN 43 YEARS OF
THIS LAW THAT HAS NOT BEEN A
SINGLE BREACH OF CONFIDENTIALITY
FROM FROM C. C. SPEED 13 22 THAT
WAS SIGNED INTO LAW LAST FALL
PROVIDES CC BUT FURTHER
INFORMATION THAT WILL CONTINUE
TO HELP DECONSTRUCT GASOLINE
PRICING AND ANSWER KEY
QUESTIONS. ALL REFINERS PROVIDED
THE FIRST SET OF REQUIRED BETTER
EARLIER THIS MONTH. AND THE DATA
WAS POSTED TO THE CDC WEBSITE ON
MARCH 17TH. C C CONTINUES TO
REVIEW THE REPORTED NUMBERS AND
MAY PUBLICIZE ADDITIONAL
INFORMATION FROM THIS EVALUATION
AS WE CONTINUE TO VERIFY THE
REPORTED DATA. FOR THE RECORD, I
WOULD LIKE TO REITERATE THE CC
DOES NOT AND WILL NOT REVEAL ANY
CONFIDENTIAL INFORMATION
PROVIDED ARE REPORTED TO US THAT
IS PROPRIETARY. OR COULD IMPACT
MARKET COMPETITION. THIS IS
ALREADY PROHIBITED BY LAW. NEXT
SLIDE, PLEASE. THE GOVERNOR'S
PROPOSAL INCLUDES FOUR ELEMENTS
THAT WILL IMPROVE TRANSPARENCY,
ACCOUNTABILITY, OVERSIGHT AND
PLANNING. PENALTY AND
ENFORCEMENT AUTHORITY DATA
COLLECTION, MONITORING,
INDEPENDENT OVERSIGHT AND
INVESTIGATION. REVIEW RECOMMEND
AND PLAN. I'LL GO INTO MORE
DETAIL OF EACH OF THE ACTIVITIES
ON THE FOLLOWING SLIDES. NEXT
SLIDE, PLEASE. THE BILL WOULD
GIVE THE CC AUTHORITY TO
ESTABLISH A MAXIMUM MARGIN FOR
REFINERS AND IMPOSE A PRICE
GOUGING PENALTY AND MARGINS
ABOUT THE MAXIMUM. CONSIDER AND
GRANT REFINERS REQUEST FOR AN
EXEMPTION, SUBJECT TO CRITERIA
AND CONDITIONS AS THE COMMISSION
MS SET TO EXERCISE THIS
AUTHORITY. THE BILL FIRST
REQUIRES THAT THE C T TAKE INTO
ACCOUNT THE BENEFITS TO
CONSUMERS AND THE POSSIBLE RISK
. FOR EXAMPLE, COULD THE PENALTY
AFFECT SUPPLY OR LEAD TO HIGHER
PRICES. IN THE LONG TERM, THE CC
WILL EXAMINE THESE ISSUES AND
CANNOT PROCEED WITH SETTING A
MAXIMUM MARGIN IN PENALTY UNLESS
WE FIND AFTER A PUBLIC PROCESS
THAT THE BENEFITS OUT THERE
OUTWEIGH THE RISKS. NEXT SLIDE,
PLEASE. THE GOVERNOR'S PROPOSAL
INCLUDES A NEW DATA COLLECTION
AUTHORITY TO PROVIDE EVEN MORE
TRANSPARENCY INTO PRICING,
INVENTORIES AND OTHER FACTORS
AFFECTING SUPPLY FROM REFINERS.
DOWN THE SUPPLY CHAIN TO
DISTRIBUTORS AND RETAILERS. THE
PROPOSAL INCLUDES COLLECTION OF
INFORMATION FROM REFINERS FOR
BETTER INSIGHT ON REFINERY
MAINTENANCE, INCLUDING WHAT
REFINERS HAVE DONE TO MAKE
PLANS. TO HAVE ADEQUATE
INVENTORY OR OTHERWISE MAKE
PLANS TO MEET CONTRACTUAL SUPPLY
COMMITMENTS DURING MAINTENANCE
AND INFORMATION ON UNPLANNED
REFINERY OUTAGES. IT ALSO
INCLUDES SPARK MARKET
TRANSACTIONS TO CREATE GREATER
TRANSPARENCY AND GIVE INSIGHT
INTO SUPPLY STRESSORS MARKET
RESPONSES AND HOW PARTICIPANTS
ARE BEHAVING IN THE MARKET AND
TO DETER PRICE MANIPULATION.
INVENTORY HOLDINGS BY TYPE OF
MARKET PARTICIPANTS SO THAT WE
CAN SEE THAT THE FINANCE
CONTRACTUAL SUPPLY OBLIGATIONS
ARE AS WELL AS TRADERS WHO DO
NOT HAVE SUPPLY OBLIGATIONS BUT
CAN SELL TO THOSE WHO DO,
ESPECIALLY AFTER UNPLANNED
OUTAGES. OVERALL THIS TERRIBLE
GIVE CCS INSIGHT INTO WHO IS
ACTING TO DECREASE UPWARD
PRESSURE ON PRICES AND WHO'S NOT
NEXT SLIDE, PLEASE. THE
GOVERNOR'S PROPOSAL SEEKS TO
ESTABLISH A NEW WATCHDOG UNIT
WITHIN THE COMMISSION WITH
GREATER EXPERTISE FOR
INDEPENDENT ANALYSIS AND
OVERSIGHT. TO DO THIS. THE
PROPOSAL ESTABLISHES AN
INDEPENDENT DIVISION OF
PETROLEUM MARKET MONITORING,
HOUSED WITHIN THE C C TO PROVIDE
INDEPENDENT OVERSIGHT AND
ANALYSIS OF THE PETROLEUM
TRANSPORTATION FUELS MARKETS.
DETECTING MARKET DESIGN FLAWS
AND MARKET POWER ABUSES. THE
DIVISION WILL HAVE ACCESS TO
CONFIDENTIAL DATA COLLECTED BY
THE CTC. AND SUBPOENA POWER TO
OBTAIN ADDITIONAL INFORMATION
FROM CALIFORNIA REFINERS AND
ABILITY TO REFER CASES TO THE
ATTORNEY GENERAL FOR
INVESTIGATION. THE PROPOSAL ALSO
INCLUDES A NEW INDEPENDENT
CONSUMER FUELS ADVISORY
COMMITTEE OF EXPERTS TO PROVIDE
ANALYSIS, GUIDANCE AND
RECOMMENDATIONS TO THE C C AND
THE INDEPENDENT DIVISION.
CONFIDENTIAL INFORMATION SHARED
WITH THIS NEW DIVISION AND
INDEPENDENT COMMITTEE WILL
REMAIN CONFIDENTIAL. EXCEPT THAT
IT MAY BE SHARED WITH THE
ATTORNEY GENERAL FOR
INVESTIGATION. NEXT SLIDE.
FINALLY. THE PROPOSAL ALSO
INCLUDES ACTIVITIES THAT WILL
ENABLE US TO LEVERAGE
INFORMATION COLLECTED TO ASSESS
PLANNING, MAKE RECOMMENDATIONS
AND THE PROFIT THAT WILL BENEFIT
CALIFORNIANS OVER THE LONG RUN.
SPECIFICALLY THE PROPOSAL CALLS
FOR FOUR DISTINCT REPORTS
ANNUALLY. THE C C AND C D T F A
WILL SUBMIT A REPORT TO THE
LEGISLATURE. INCLUDING A REVIEW
OF PRICE OF GASOLINE IN
CALIFORNIA AND ITS IMPACT ON
STATE REVENUES. Tð ANNUALLY. THE
DIVISION. THE INDEPENDENT
DIVISION WILL REPORT ON ITS
FINDINGS AND RECOMMENDATIONS TO
IMPROVE MARKET PERFORMANCE BASED
ON ANALYSIS OF INFORMATION
COLLECTED AND REQUESTED IN PRIOR
YEAR. AND THE ADVICE OF THE
ADVISORY COMMITTEE. THREE CC AND
CARB WILL WILL PREPARE AT
TRANSPORTATION FUEL TRANSITION
PLAN, INCLUDING A DISCUSSION ON
HOW TO ENSURE SUPPLY OF
PETROLEUM AND ALTERNATE
TRANSPORTATION. FUELS IS
AFFORDABLE, RELIABLE, EQUITABLE
AND ADEQUATE TO MEET THE DEMAND.
SISI CARBS CNR AND CALI P A WILL
CONSULT WITH THE MULTI
STAKEHOLDER MULTI AGENCY WORKING
GROUP, INCLUDING ENVIRONMENTAL
JUSTICE GROUPS AND INDUSTRY
REPRESENTATIVES IN CRAFTING THIS
PLAN. AND FINALLY, EVERY THREE
YEARS WE WILL SUBMIT AN
ASSESSMENT TO THE LEGISLATURE
IDENTIFYING METHODS TO ENSURE
THAT RELIABLE SUPPLY OF
AFFORDABLE AND SAFE
TRANSPORTATION FUELS IN
CALIFORNIA. THANK YOU. THAT
CONCLUDES MY PRESENTATION AND
LOOK FORWARD TO THE QUESTIONS
LATER. THANK YOU. WE'RE GOING TO
HOLD OFF TWO QUESTIONS. SO AFTER
ALL THE PANELISTS PRESENT, SO
WE'LL ASK THE NEXT PERSON ON THE
AGENDA, PLEASE. THANK YOU. GOOD
AFTERNOON. MY NAME IS ELEANOR
BLOOM, AND I SERVE AS A SPECIAL
ASSISTANT ATTORNEY GENERAL AT
THE CALIFORNIA DEPARTMENT OF
JUSTICE. I LEAD ATTORNEY GENERAL
BONDI AS ECONOMIC JUSTICE
PORTFOLIO, INCLUDING OUR
CONSUMER PROTECTION AND
ANTITRUST WORK. THANK YOU.
CHERRY GARCIA FOR INVITING ME TO
PARTICIPATE IN TODAY'S
INFORMATIONAL HEARING.
ADDRESSING THE LACK OF
TRANSPARENCY IN CALIFORNIA'S
RETAIL GAS MARKET. ONE THAT
ENABLES EXORBITANT PRICES AND
PROFITS ON THE BACKS OF
CALIFORNIA FAMILIES DOESN'T
MATTER OF PARAMOUNT IMPORTANCE.
IN THE STATE. AND OF PARAMOUNT
IMPORTANCE FOR OUR ENVIRONMENT
AND THE FUTURE OF THE PLANET.
ATTORNEY GENERAL BONDI IS PROUD
TO STAND WITH GOVERNOR NEWSOM IN
CO SPONSORING SBX ONE DASH TO
TAKE ON BIG OIL AND PROTECT
CALIFORNIA CONSUMERS. RECORD
HIGH RETAIL GAS PRICES. AND
RECORD EYE POPPING PROFITS FOR
BIG OIL. HURT MOST. THOSE WHO
CAN LEAST AFFORD WELL, MANY
FACTORS CONTRIBUTE TO THE PRICE
OF GASOLINE IN CALIFORNIA'S
UNIQUE FUELS MARKET. WE CANNOT
LET OBFUSCATION FACILITATE BIG
OIL PULLING EXCESSIVE PROFITS
OUT OF CONSUMER'S POCKET. THE
GOVERNOR'S PROPOSAL WOULD
AUTHORIZE THE ENERGY COMMISSION
AS COMMISSIONER GRANDES JUST
NOTED THROUGH A PUBLIC PROCESS.
TO IMPOSE THE PRICE GOUGING
PENALTY TO CURB EXCESSIVE
PROFITS AND RETURN THE FUNDS.
HARDWORKING CALIFORNIANS WOULD
ALSO CRITICALLY. IMPROVED
TRANSPARENCY INTO CALIFORNIA'S
PETROLEUM MARKET AND CREATE AN
INDEPENDENT WATCHDOG WITHIN THE
ENERGY COMMISSION TO INVESTIGATE
THE INDUSTRY'S MARKET ACTIVITIES
AND REFER VIOLATIONS TO THE
ATTORNEY GENERAL'S OFFICE FOR
PROSECUTION. THIS IS HOW
CALIFORNIA RESETS THE STAKES
WITH BIG OIL. FOR DECADES, THE
ATTORNEY GENERAL'S OFFICE HAS
INVESTIGATED GAS PRICES. LOOK
FOR PRICE FIXING AND MARKET
MANIPULATION AND PROSECUTED BAD
ACTORS. THAT SCHEME TO DRIVE UP
THE PRICE OF GAS DURING PREVIOUS
PERIODS OF MARKET DISRUPTION. IN
2017. WE STOPPED A PROPOSED
ACQUISITION BY VALERO OF THE
LAST MAJOR INDEPENDENT, REFINED
PRODUCT STORAGE AND MIXING
FACILITIES IN NORTHERN
CALIFORNIA. WE HAVE ONGOING
LITIGATION AGAINST TO
MULTINATIONAL GAS TRADING FIRMS
FOR ALLEGEDLY MANIPULATING
CALIFORNIA'S GAS PRICES AND
COSTING CONSUMERS MORE AT THE
PUMP IN THE WAKE OF THE 2015
EXPLOSION AT THE TORRANCE
REFINERY. AND AS WE HAVE SEEN SO
CLEARLY OVER THE PAST YEAR WITH
THOSE PRICE BIKES THAT WE JUST
SAW. CALIFORNIA NEEDS MORE. THE
NEW MARKET OVERSIGHT BODY WILL
BE ANOTHER COP ON THE BEAT. ONE
THAT WILL ENABLE SOPHISTICATED
MARKET MONITORING. AND THE
PROSECUTION BY OUR OFFICE WHEN
APPROPRIATE. TRANSPARENCY HELPS
MARKETS WORK BETTER. AND HAVING
MORE AND BETTER INFORMATION
REPORTED TO REGULATORS UP FRONT
SO THAT IT DOES NOT NEED TO BE
RECONSTRUCTED AFTER THE FACT.
WE'LL MAKE THE CALIFORNIA
DEPARTMENT OF JUSTICE, A MORE
EFFECTIVE LAW ENFORCEMENT
AGENCY. CALIFORNIA'S GASOLINE
MARKET IS SHOCKINGLY OPAQUE. AND
WE KNOW THAT IT IS VULNERABLE TO
MANIPULATION. AS COMMISSIONER
GOING TO NOTED THE INFORMATION
REPORTING IN THE GOVERNOR'S
PROPOSAL BUILDS OFF OF A
STRUCTURE THAT HAS BEEN IN PLACE
FOR MORE THAN FOUR DECADES. THE
PETROLEUM AND INDUSTRY
INFORMATION REPORTING ACT OF
1980 PIRATE PROVIDED FOR CC
COLLECTION AND ANALYSIS OF
INDUSTRY DATA. AND LAST YEAR'S
SP 13 22 ADDITIONAL STEPS
TOWARDS TRANSPARENCY, REQUIRING
MONTHLY REPORTS ON CERTAIN DATA
POINTS. WITH SBX 12. NOW THE OIL
COMPANIES WILL NEED TO PROVIDE
GREATER TRANSPARENCY ABOUT THE
OPERATIONS AND TRADES THAT
TRANSLATES TO GREATER COSTS FOR
CONSUMERS. THE REFINERIES AND
OTHER MARKET PARTICIPANTS THAT
RUN THIS MARKET. WILL NEED TO
PROVIDE MORE GRANULAR, MORE
TIMELY AND MORE RELEVANT
INFORMATION TO THE C C. A LOT OF
THIS IS PRETTY BASIC INFORMATION
LIKE WHO IS BUYING AND SELLING.
WHAT THE PRICES AND FOR HOW MUCH
FUEL WHAT DAY AND TIME THE
TRANSACTION TAKES PLACE. BUT
THIS IS INFORMATION THAT MARKET
REGULATORS CURRENTLY DO NOT HAVE
ON A MARKET WIDE FACES. IN OUR
ENFORCEMENT EXPERIENCE. MY
OFFICE HAS FOUND THAT THIS
MANDATED REPORTING IS CRITICALLY
NEEDED RIGHT NOW WE GO HUNTING
AND THEN HAVE TO UNSCRAMBLE THE
EGGS THAT HAVE BEEN SO EXPERTLY
SCRAMBLED BY THE MARKET
PARTICIPANTS WHO HAVE THEM WE DO
IT AND WE ARE HARD AT WORK,
MAKING THE MOST OF WHAT WE HAVE.
BUT CALIFORNIANS DESERVE BETTER.
THE PROPOSED REPORTING SYSTEM
AND AS SBX 1-2 IS A SENSIBLE
APPROACH. BUILDING ON A FOUR
DECADES OLD STRUCTURE TO ENABLE
MARKET MONITORING AND REFERRALS
TO THE ATTORNEY GENERAL WHEN
THERE IS REASON TO BELIEVE THE
BIG OIL IS NOT PLAYING BY THE
RULES. CALIFORNIA IS READY. IT
IS TIME TO END THE OBVIOUS
CATION IN THE OPACITY THAT
FACILITATE EXTRAORDINARY PROFITS
FOR BIG OIL AT THE EXPENSE OF
HARDWORKING CALIFORNIA FAMILIES.
THANK YOU. THANK YOU VERY MUCH.
WE'LL GO DOWN THE LIST TO THE
NEXT PERSON AND BELIEVED THEY
WERE GOING TO BE PROVIDING SOME
WORDS. BE A REMOTELY. AYE. UM
I'M TRYING TO SHARE MY SLIDES,
BUT I CANNOT SHARE CONTENT. AH,
PERHAPS THERE'S OH, THERE WE GO,
OKAY? UM. IF I CAN SHARE THAT.
I'M HOPING YOU CAN SEE THOSE
SLIDES. I'M GOING TO JUST SAY A
COUPLE WORDS SHARING SLIDES AND
THEN I WILL MAKE SOME COMMENTS
ON THE NEW LEGISLATION. UM THE
DISCUSSION SO FAR HAS VERY MUCH
FOCUSED ON PRICE SPIKES. BUT I
WANT TO REMIND YOU THAT THAT'S
NOT WHERE MOST OF THE MONEY THAT
CALIFORNIANS ARE PAYING FOR
EXCESS PAYMENTS FOR GASOLINE IS
GOING AH, THIS IS CALIFORNIA
COMPARED TO THE REST OF THE
COUNTRY OVER THE LAST 20 YEARS
AFTER YOU TAKE OUT THE HIGHER
TAXES AND ENVIRONMENTAL COSTS.
AND THERE ARE A COUPLE OF SPIKES
IN THERE AND THEY BREATHE. THEY
OCCUR BRIEFLY, BUT THAT'S NOT
WHAT WHAT'S REALLY DRAINING
CONSUMERS POCKETS. WHAT'S REALLY
DRAINING CONSUMERS POCKETS IS
THE CONTINUOUS HIGH PRICES THAT
WE'VE SEEN SINCE THE BEGINNING
OF 2015, WHICH I HAVE CALLED THE
MYSTERY GASOLINE SURCHARGE. UH
THE THAT'S NOT JUST IN A FEW
SPIKES. IT'S BEEN CONSTANT SINCE
2015. AND IF WE'RE REALLY GOING
TO TRY TO SAVE CONSUMERS MONEY
FOCUSING ON THE PRICE SPIKES IS
REALLY NOT GOING TO ADDRESS IT.
IN FACT, MOST OF THE MYSTERY
GASOLINE SURCHARGE ISN'T EVEN
COMING AT THE REFINERY LEVEL.
THIS IS THE SPOT PRICE OF
GASOLINE SINCE 2015 OR SO SORRY
SINCE 2003 AND YOU DON'T SEE A
TREND UPWARD AFTER 2015. YOU SAW
SOMEWHAT HIGHER PRICES IN 2015
AND 2022, BUT BY AND LARGE,
ACTUALLY, THE SPOT PRICE
RELATIVE TO THE REST OF THE
COUNTRY HAS NOT BEEN INCREASING.
MOST OF IT HAS BEEN OCCURRING
DOWNSTREAM FROM THE REFINERY.
THAT DOESN'T LET LET THE
REFINERS OFF THE HOOK. THE
REFINERS HAVE A LOT OF POWER
DOWNSTREAM AND HAVE COMPLEX
CONTRACTS WITH DOWNSTREAM
MARKETERS, DISTRIBUTORS AND
RETAILERS THAT ALLOW THEM TO
EXTRACT PROFITS FROM DOWNSTREAM
, BUT WE REALLY CAN'T JUST FOCUS
ON THE REFINERIES OR WE'RE GOING
TO MISS. MOST OF WHERE THIS
MONEY IS GOING. THIS BY THE WAY
IS THE PRICE BIKE THAT OCCURRED
LAST FALL. THE SPOT PRICE AND
THE RAT PRICE WENT UP BRIEFLY,
BUT THEY CAME DOWN VERY QUICKLY
, PARTICULARLY AFTER GOVERNOR
NEWSOM MOVE FORWARD THE WINTER
BLEND GASOLINE, BUT THAT TOP
LINE IS THE RETAIL PRICES AND
THEY DID NOT COME DOWN FOR
ANOTHER COUPLE OF MONTHS. UH HUH
. POLICY TO GO AFTER THE EXCESS
PROFITS AT THE REFINERY WOULD
NOT TOUCH THAT EXTRA GAP AT THE
RETAIL LEVEL. AND SO THAT'S WHY
WE NEED TO GO BEYOND JUST
LOOKING AT REFINERIES, AND WE
NEED TO EXAMINE THE ENTIRE
INDUSTRY SO MOST OF CALIFORNIA'S
GASOLINE PRICE PROBLEM IS NOT AT
THE REFINERY. IT'S NOT SHOWING
UP AT THE RACK THAT IS THE
WHOLESALE LEVEL. AH MOST OF IT
IS DOWNSTREAM IN WHAT THE
INDUSTRY CALLS, MARKETING,
DISTRIBUTION AND RETAILING.
CALIFORNIA REFINERS ARE IN THOSE
SECTORS AS WELL DIRECTLY OR
THROUGH COMPLEX CONTRACTS THEY
HAVE WITH DOWNSTREAM FIRMS.
CALIFORNIA DOWNSTREAM MARKETS
SEEMED TO BE LESS COMPETITIVE
THAN ELSEWHERE. WE HAVE FEWER
STATIONS. WE HAVE FEWER
UNBRANDED STATIONS. WE HAVE
FEWER STATIONS PER DRIVER PER
GALLON SOLD. WE HAVE FEWER
UNBRANDED STATIONS. UH AND WE
HAVE BIGGER PRICE DIFFERENTIALS
BETWEEN BRANDED AND UNBRANDED
STATIONS. THOSE ARE PUZZLES THAT
WE REALLY NEED TO SORT OUT AND
FIGURE OUT WHY THE MARKET IS NOT
AS COMPETITIVE THE EXACT CAUSE.
I DON'T KNOW THE EXACT CAUSE OF
THIS MYSTERY GASOLINE SURCHARGE
. I THINK WE NEED AN
INVESTIGATION DONE BY REAL
EXPERTS AND COMPETITION POLICY
AND GASOLINE MARKETS. SO LET ME
NOW STOP SHARING SLIDES AND JUST
TALK FOR A MOMENT ABOUT THE
POLICIES THAT WE HAVE SEEN. UM.
I VERY MUCH ARE THE NEW PROPOSAL
. I VERY MUCH LIKED THE IDEA OF
A NEW INDEPENDENT DIVISION
WITHIN THE CC FOCUSED ON
COMPETITION ISSUES AND GASOLINE
. IN FACT, I WOULD PROBABLY MAKE
IT BROADER AND MANDATED TO STUDY
COMPETITION AND MARKET FUNCTIONS
ACROSS CALIFORNIA ENERGY MARKETS
MORE GENERALLY, WE SAW RECENTLY
THE NEED TO STUDY IT IN NATURAL
GAS, AND THERE HAVE BEEN MANY
TIMES AND ELECTRICITY. THE
SKILLS ONE NEEDS TO STUDY. THESE
DIFFERENT INDUSTRIES ARE VERY
SIMILAR. SO IF WE'RE
ESTABLISHING THIS DIVISION, I
WOULD ACTUALLY ESTABLISHED IT
MORE BROADLY. MY MAIN CONCERN
WITH THE DRAFT LEGISLATION IS
THAT IT SEEMS TO CREATE A SINGLE
ADVISORY COMMITTEE CALLED THE
INDEPENDENT CONSUMER FUEL IS
ADVISORY COMMITTEE. THAT IS A
COMBINATION OF TWO DIFFERENT
GROUPS, STAKEHOLDERS AND
INDEPENDENT EXPERTS. I REALLY
THINK THAT'S NOT A GOOD IDEA AND
WILL ULTIMATELY NOT BE HELPFUL.
I AGREE WITH THE NEED TO HAVE A
STAKEHOLDER COMMITTEE WITH
REPRESENTATIVES FROM CONSUMER
ADVOCATES, ENVIRONMENTAL GROUPS
, JUSTICE GROUPS, LABOR, THE OIL
INDUSTRY AND OTHERS SO THAT
ADVOCATES OF ALL PARTIES ARE
HEARD IN THE PROCESS. BUT THAT
IS A VERY DIFFERENT MISSION THAN
THE ONE THAT WOULD BE THE CASE
FOR A COMMITTEE OF INDEPENDENT
EXPERTS WHO CAN EVALUATE AND
HELP GUIDE THE ANALYSIS OF THE
NEW C C DIVISION. AND I THINK
THE NEED FOR THAT INDEPENDENT
COMMITTEE OF INDEPENDENT EXPERTS
IS QUITE GREAT. I THINK THE NEW
DIVISION WELL THAT THE NEW
DIVISION NEEDS THAT COMMITTEE OF
EXPERTS IN COMPETITION POLICY
AND LAW, SUCH AS THE PETROLEUM
MARKET ADVISORY COMMITTEE WAS
THE ONE THAT I SERVED ON AND
CHAIRED FOR MOST OF THE TIME IT
EXISTED FROM 2014 TO 2017. THIS
IS GOING TO BE A VERY COMPLEX
ANALYSIS THAT WILL REQUIRE A LOT
OF ECONOMIC AND LEGAL INSIGHT.
THE OIL INDUSTRY WILL HAVE A LOT
OF ARGUMENTS FOR WHY WHAT WE SEE
IS PERFECTLY NORMAL MARKET
FUNCTION AND SORTING OUT THOSE
REALLY THE NON COMPETITIVE
BEHAVIOR FROM NORMAL MARKET
FUNCTION REQUIRES QUITE A BIT OF
EXPERTISE. WELL I THINK IT'S
POSSIBLE TO SEE A C CAN RECRUIT
SOME YOUNG MOTIVATED ANALYSTS
WHO CAN GET QUITE A LOT OF WORK
DONE. I AM NOT AT ALL CONFIDENT
THAT THEY CAN RECRUIT ECONOMISTS
AND LAWYERS WITH DEEP EXPERIENCE
IN COMPETITION POLICY BECAUSE
THOSE PEOPLE ARE UNLIKELY TO
LEAVE MUCH MORE LUCRATIVE
POSITIONS IN LESS BUREAUCRATIC
ORGANIZATIONS. TO BECOME FULL
TIME EMPLOYEES AT THE C. C. ON
THE OTHER HAND, I THINK IT WOULD
NOT BE HARD TO CREATE A
COMMITTEE AS WE DID WITH THE PEE
MAK OF TOP ECONOMISTS AND
LAWYERS WHO WOULD BE WILLING TO
SERVE PROBABLY WITHOUT WITH
LITTLE OR NO COMPENSATION TO
HELP GUIDE THAT ANALYSIS AND
INVESTIGATION. TO BE COMPLETELY
HONEST. WITHOUT SUCH AN EXTERNAL
ADVISORY COMMITTEE OF EXPERTS, I
THINK IT IS MUCH LESS LIKELY
THAT THE NEW DIVISIONS, POWERS
AND RESOURCES WILL ALLOW THEM TO
EFFECTIVELY ANALYZED AND SORT
OUT COMPETING POSSIBLE CAUSES OF
THE MYSTERY GASOLINE SURCHARGE,
SO I REALLY LIKE THIS NEW
PROPOSAL. I THINK IT'S VERY MUCH
HEADED IN THE RIGHT DIRECTION.
THE ONE STRONG SUGGESTION I HAVE
IS TO SEPARATE THESE TWO
COMMITTEES HAVE A COMMITTEE OF
STAKEHOLDERS BUT HAVE A SEPARATE
COMMITTEE OF INDEPENDENT EXPERTS
WHO CAN REALLY BRING TO BEAR THE
EXPERIENCE OF DOING THIS SORT OF
COMPETITION POLICY ANALYSIS IN
ORDER TO MAKE THIS INVESTIGATION
MORE EFFECTIVE. THANK YOU. THANK
YOU. WE'LL MOVE ON TO THE NEXT
PERSON WHO WILL BE ALSO CHECKING
IN REMOTELY. ROBERT MCCULLOCH.
AFTERNOON THANK YOU, CHAIRMAN.
THANK YOU VERY MEMBERS FOR THE
INVITATION. I THOUGHT ABOUT
FLYING DOWN TO CALIFORNIA SO I
COULD ENJOY SOME OREGON WEATHER
, BUT INSTEAD IT'S SUNNY AND
WARM. AND PORTLAND, OREGON. I
APOLOGIZE FOR ME ENJOYING THE
GOOD WEATHER TODAY. AND THEN
WORKING ON THIS ISSUE FOR THE
PAST. 13 YEARS. OH, MY GOD.
AFTER BEING INVITED TO TESTIFY
AT THE U. S. SENATE BY UM,
WASHINGTON. UH SENATOR MARIA
CANTWELL. AND THE REASON WHY
MARIA CANTWELL AND RON WYDEN.
AND SENATOR FEINSTEIN WERE
INTERESTED IN THIS WAS BECAUSE
THE PRICE IS SET AT THE L. A
MARKET HUB. RAPIDLY ALMOST
DEALING TRANSLATE TO HIGHER
PRICES ACROSS THE WEST COAST. DO
YOU HAVE YOUR NEIGHBORING STATES
WATCHING VERY CAREFULLY WHAT
YOU'RE DOING AND I BELIEVE VERY,
VERY HAPPILY. I AGREE WITH
CHEVRON THAT THIS IS A GREAT
STEP, AND I LIKE SEVERANCE
ARGUMENTS THAT STAKEHOLDERS AND
EXPERTS SHOULD NOT BE ALLOWED IN
THE SAME ROOM. AH! STAKEHOLDERS
ARE CRITICAL, BUT SOME OF THESE
DISCUSSIONS ARE, FRANKLY OR I'M
GOING TO BE WHERE I HIT THE
SHARE BUTTON NOW AND HOPEFULLY
THIS WILL WORK.
GOOD. HERE'S THE BOTTOM LINE,
AND I WAS TAUGHT YEARS AGO WHEN
I WAS A UTILITY EXECUTIVE TO
ALWAYS START WITH THE BOTTOM
LINE. UH THE CONTRACTS THAT SET
THE PRICES OF THE GAS STATIONS.
OR NOT MIND PA CONTRACTS. THE
USER DRIVEN DIRECTLY FROM THE
GASOLINE SPOT MARKET AT THE L. A
PIPELINE. THE MARKET DOWN. THERE
IS AN OBSCURE MARKET BASED ON
LIMITED NUMBER OF TRADES AND
THEIR SELF REPORTED THE
CALCULATION IN THIS PART SPOT
MARKET PRICES NEITHER
TRANSPARENT OR SUBJECT TO ANY AH
, OFFICIAL REVIEW NOW THIS IS
PRETTY IMPORTANT ISSUE AS FAR AS
I KNOW. NOT ONE REGULATORY PARTY
AND EITHER THE FEDERAL LEVEL OR
THE STATE LEVEL TAKES THE OPUS
INDEX. I'D BE HAPPY TO HEAR THAT
I'M WRONG. BUT THAT IS VERY
SCARY. THE. SPOT MARKET PRICE
ITSELF HAS ABSOLUTELY NO
RELATIONSHIP TO THE COST OF
PRODUCTION ORDERS THE BLIND
DEMAND IN CALIFORNIA AND I'LL
PUT A AH! REGRESSION SLIDE UP,
NOT BECAUSE I BELIEVE EVERYONE
WILL BE VERY IMPRESSED, BUT
SIMPLY TO NOTE THAT IF ASKED ON
THE STAND UNDER OATH WHETHER THE
PRICES IN CALIFORNIA WE'RE DOING
DRIVEN BY SUPPLY AND DEMAND IN
2022. I WOULD HAVE TO SAY THAT
HYPOTHESIS WHEN WE REJECTED BY
THE STATISTICS. 2022 IS. WE ALL
KNOW THE PRICES INEXPLICABLY
HOT. SO THIS IS WHY WE NEED A
LIMIT ON PRICE GOUGING. NOW,
JUSTIN ASIDE. 20 YEARS AGO, THE
FEDERAL ENERGY REGULATORY
COMMISSION NOW IT'S 22 YEARS
AGO. FINALLY SAID A WESTSIDE
RICE LEAD ON ELECTRICITY SALES.
REMOVE THE INCENTIVE FOR THE
MANIPULATIONS IN THE CALIFORNIA
MARKET RISES. ON THE NEXT DAY.
THE PRICES FELL THE POWER PLANTS
THAT WERE SUSPICIOUSLY OFFLINE
WENT BACK ONLINE. THAT CAP NEVER
WAS INVOKED. THE ELIMINATION OF
THE INCENTIVE WAS ENOUGH TO MAKE
THE MARKET REPAIR ITSELF. WHAT'S
THE BOTTOM LINE? THEIR
TRANSPARENCY IS CRITICAL. AND
ELIMINATING THE INCENTIVE TO
CHEAT IS ALSO CRITICAL. I
BELIEVE THIS NEW LAW WILL DO
BOATS. A LITTLE QUICK BACKGROUND
, WHICH IS ALMOST NEVER
DISCUSSED IN THESE HEARINGS. AN
INDEPENDENT FIRM, VERY HIGHLY
RESPECTED. BEEN AROUND FOREVER,
IS CALLED THE OIL PRICE
INFORMATION SERVICE. THIS IS THE
PRIME ALREADY SOURCE OR PRICING
ON THE WEST COAST. THE CONTRACTS
FROM GAS STATIONS DIRECTS THE
MENTAL MAN TO SPECULATORS.
ALMOST ALWAYS REFERENCE THE OPUS
PRICE INDICES. INEXPLICABLE
CHANGES IN THOSE INDEXES ARE
COMMON AND I'LL TALK ABOUT ONE
IN A MOMENT. US SENATOR MARIA
CAMEL HAS REMARKED THAT WE KNOW
MORE ABOUT THE MARKET FOR
SOYBEANS, AND WE KNOW ABOUT THE
MARKETS WHERE OIL AND GAS LEAK
ABSOLUTELY CORRECT. THERE'S A
CHART OF OPUS PRICES. ACROSS.
CALIFORNIA FOR THE 1ST 11
MONTHS. NOW LET ME TALK A LITTLE
BIT ABOUT THE WEIRD
TRANSPARENCY. ALL THE OPENS
MATERIALS HIS SECRET. EVERYONE
HAS THEM. HOWEVER, WE'RE NOT
ALLOWED TO TALK ABOUT THEM IN
THIS CASE. LUCKILY IT WAS
POSSIBLE TO TAKE THESE PRICES
OFF THE WORLD WIDE WEB. NO, NONE
OF THESE CAME FROM DATA THAT WE
MIGHT HAVE ALWAYS SUPPLIED BY
ANYONE OTHER THAN MATERIAL. IT'S
REALLY AVAILABLE ON THE WEB. AND
THEY IMPORTANT PART HERE IS THE
GRAY LINE. IS THE SPOT PRICE
MINUSES SPECIFIC TAXES. AND YOU
WILL NOTICE THAT THE SPOT PRICE
IS VERY VOLATILE. THE HELLISH
FALL THAT CALIFORNIA HAD WAS
BASED ON A VERY NARROW PERIOD
SPOT PRICES. AND SEVEN SAID
SOMETHING VERY IMPORTANT. THIS
IS THE ROCKET AND FEATHER
PHENOMENON. THE PRICE SHOT UP.
AND THEN SUBSIDED IN THE SPOT
MARKET WHERE IT'S AT BUT FLOATED
DOWN. AND THE RETAIL MARKET
THAT'S BEEN OBSERVED FOR MANY
YEARS. I THINK THE EXPLANATION
IS THAT. THE CONTRACTS FORCED
THE PRICE UP THE NEXT DAY. WHEN
THIS PART MARKET GOES UP. BUT
THE CONTRACTS DO NOT FORCE
RETAILERS. TO COMPETE
IMMEDIATELY. SO THE IMPACT OF
NORMAL ECON ONE OH, ONE
COMPETITION. OFTEN TAKES WEEKS
OR EVEN MONTHS TO GET THE PRICE
BACK TO WHERE IT SHOULD BE. SO
WHAT HAPPENED IN 2022? WELL, IT
TESTIFIED TO THE U. S SENATE ON
THIS BRIBE SOMEONE A YEAR AGO.
WHEN WE NOTICED THAT FOR TWO
WEEKS THE PRICE. UH THE OPUS
INDEX IN L. A DID NOT CHANGE.
JUST THINK ABOUT THAT FOR A
MOMENT. IS THIS ONE OF THE MOST
IMPORTANT MARKETS IN THE WORLD?
AND NOBODY TRADED FOR TWO WEEKS.
NOW WE'VE HEARD GREAT SHORTAGES
, ENORMOUS INTERESTING EVENTS.
BUT NOBODY TRADED. NOBODY RAN
OUT, RAN TO THE STORE AND BOUGHT
ANYTHING. NOBODY SOLD ANY THERE
WAS ONLY ONE SELF REPORTED TRADE
TO THE OPPOSITE SEX. THIS IS
VERY SUSPICIOUS. NOT THE FIRST
TIME THAT WE'VE HAD SUSPICIOUS
TRADING IN THIS AREA. CORRECT BY
FAR, NOT THE FIRST TIME. BUT
IT'S AN EXAMPLE OF A MARKET THAT
WE KNOW VERY LITTLE ABOUT. BUT
HERE ARE THE. DATA ON THREE
ITEMS THAT WE USE IN STATISTICS.
HEARD BOMB PRODUCTION. CAR, BOB
INVENTORY AND TAXABLE SALES.
CALIFORNIA MAINTAINS ENORMOUS
DATA, BUT EACH AGENCY HAS.
CAPTAIN. STATUS SEPARATE IT HAS
DIFFERENT DEFINITIONS. HE'S IN
POINT, THE ALL IMPORTANT TAXABLE
SALES OF GASOLINE. INCLUDES JET
FUEL. NOT AN OBVIOUS CONNECTION
TO ME. SO. AND LET'S SAY I'M
GONNA DO THE REGRESSION OUT.
THINK I JUST RAN THAT DATA
AGAINST THE RETAIL PRICES IN
2022 FOR THE 1ST 11 MONTHS? AND
FOR THOSE OF YOU WHO REMEMBER
FRESHMAN STATISTICS. AND DON'T
WORRY IF YOU DON'T YOU'LL NOTE
THAT THE SIGNIFICANCE OF THIS
WAS VERY LOW. IF YOU LOOK TO THE
UPPER AND LOWER CONFIDENCE
INTERVALS. WE CAN'T TELL WHETHER
TAXABLE SALES WAS RELEVANT. WE
CAN'T TELL WHETHER INVENTORY WAS
RELEVANT. WE CAN'T TELL WHETHER
PRODUCTION WAS THRILLED. THIS IS
DISCOURAGING. HE SHOULD NOT
HAPPEN IN ANY EFFICIENT MARKET.
SO TAKEAWAYS. THESE ARE THE
CONCLUSIONS THAT I PREPARED FOR.
APPEARANCE OF THE U. S. SENATE.
CALIFORNIA CONSUMERS PAID 4.7
BILLION MORE FOR CAR BOB AND
2022, THEN 2021. EVEN AFTER THE
COSTS ARE CORRECTED FOR
INFLATION. THE WHOLESALE MARKUP.
WAS AN INCREASE OF 30.6% IN REAL
TERMS. CROSSED OF CRUDE AND 55.6
BILLION CONSUMER BILLS THAT
DOESN'T SURPRISES. JAMIE COURT
ALWAYS POINTS THIS OUT TO ME AND
SAYS WELL, BUT THAT'S NOT WHAT
IT COST US BECAUSE WE PRODUCE A
LOT OF OUR OWN WELL. BUYING
ARGUMENT. I'LL LEAVE THAT TO
JAMIE BY ANY STANDARDS. PUTIN'S
ADVENTURES IN THE EUROPEAN WAR
WERE VERY COSTLY TO EVERYONE,
INCLUDING OURSELVES. BUT HERE'S
AN INTERESTING STATISTIC AT THE
END. THE RETAIL MARGIN ACTUALLY
FELL IN 2022. THE WHOLESALE
MARGINS SURGED UPWARDS. BY
ALMOST 50. THAT'S A HELL OF A
CHANGE. AND WE'RE NOT TALKING
NOW ABOUT THE BRAND OF CRUDE
INDEX WHERE WE BUY CRUDE ACROSS
THE WORLD. WE'RE JUST TALKING
NOW ABOUT CALIFORNIA AND WHO GOT
THE MONEY IN THE END. SO FINAL
WORDS. THERE HAS BEEN
SUBSTANTIAL EVIDENCE OF MARKET
POWERING GAMING AND CALIFORNIA
MANY YEARS. WHEN I WAS ASKED
INTO THIS BY SENATOR PARENT WILL
WE SAW VERY LITTLE EVIDENCE FOR
THE 2012 OCTOBER 1ST PRICE IN
GREECE. ONE DAY ENORMOUS
INCREASE NO REAL SHORTAGES.
MARKET SURVEILLANCE IS A
VALUABLE TOOL. QUITE OFTEN. WHEN
I GIVE A LECTURE ON THIS, I
QUOTE ADAM SMITH, AND HE SAYS
SOMETHING MUCH BETTER THAN I
WILL NOW. THE FIRST THING THAT
MEN OF THE SAME TRADE DISCUSSED
AT LUNCH IS HOW TO DEFRAUD THE
PUBLIC. ALRIGHT. HE INVENTED THE
INVISIBLE TO THE END, BUT HE WAS
NOT LIVE. SIMPLY PUT
STREETLIGHTS REDUCE CRIME. WHEN
I TALKED TO THE SENATE, BY THE
WAY, I GOT CHEWED OUT FOR THIS.
I HAVE TO ADMIT TO YOU. I KNOW A
HELL OF A LOT MORE ABOUT OIL AND
GASOLINE CRIME. AND WE'RE DONE
FOR PROFIT CAMPS AND PRICE
GOUGING LIMITS. REMOVE THE
INCENTIVE FOR EMERGENT
MISBEHAVIOR. THE EASIEST WAY TO
GET A STABLE MARKET IS TO MAKE
SURE THAT WILD BY GYRATIONS ARE
DISCOURAGED AND CAUSED IT OUT.
THE BOTTOM LINE IS, I THINK
YOU'RE DOING A HELL OF A GOOD
JOB. I DON'T HAVE A CLIENT IN
THIS. I'M NOT PAID HERE TODAY. I
DON'T BUY GASOLINE. ANY GOOD
ECONOMIST I DRIVE AN ELECTRIC
CAR. BUT I DO KNOW THAT OUR
ECONOMY WILL BE BETTER SERVED.
WE HAVE A MARKET SURVEILLANCE,
WHICH WE'VE NOT HAD. AND WITH
LIMITS. ONE LAST ITEM. WE EVEN
ENORMOUS ABOUT THESE MATERIALS
ON OUR WEBSITE IF YOU'RE
INTERESTED. THANK YOU VERY MUCH
. CHAIRMAN THANK YOU VERY MUCH.
MEMBERS OF THE COMMITTEE. THANK
YOU AND AGAIN, WE'LL HOLD ANY
QUESTIONS TO THOSE WHO ARE
PARTICIPATING REMOTELY. AFTER
ALL THE PRESENTERS, UM MAKE
THEIR OPENING REMARKS SO WE'LL
GO ON TO THE NEXT PRESENTER,
PLEASE. PROCEED. THANK YOU. GOOD
AFTERNOON, MR CHAIRMAN, MEMBERS
OF THE COMMITTEE. AND THANK YOU
FOR THE OPPORTUNITY TO SPEAK
TODAY. MY NAME IS KATHERINE RE
HIGH SCHOOL. BOYD AND I'M
PRESIDENT, CEO OF THE WESTERN
STATES PETROLEUM ASSOCIATION,
AND I'LL BE SHARING NOT
SURPRISINGLY, A LITTLE DIFFERENT
PERSPECTIVE. 108 DAYS INTO THE
SPECIAL SESSION. WE NOW HAVE
DETAILS OF THE WINDFALL PROFITS
TAX APPROACH. SO WE'LL BE ABLE
TO SHARE INFORMATION WITH
CALIFORNIANS. IN THE SHORT TIME
WE'VE BEEN ABLE TO REVIEW THE
DETAILS. IT IS CLEAR IN THESE
108 DAYS. THIS APPROACH IS JUST
AS EXPENSIVE JUST AS ONEROUS AND
HELPFUL TO OUR ENERGY FUTURE,
AND IT'S NOT GONNA HELP
CALIFORNIA CONSUMERS. THE
PROPOSED PROFITS PENALTY ON
CALIFORNIA'S REMAINING IN STATE
REFINERS DOES NOTHING TO
INCREASE THE SUPPLY OF GASOLINE
OR REDUCE THE COST OF THE PUMP,
AND IN FACT, IT COULD HAVE AN
INTENDED CONSEQUENCES OF
LIMITING SUPPLY AND EXASPERATED
PRICE SPIKES FOR CALIFORNIA
DRIVERS. BEFORE EXPERIMENTING
WITH CALIFORNIA'S TRANSPORTATION
, FUEL SUPPLIES. WE STRONGLY
ENCOURAGE ALL POLICYMAKERS TO
TAKE THE TIME. TO UNDERSTAND THE
STATE'S UNIQUE FUEL MARKET,
INCLUDING INCLUDING THE PRIMARY
DRIVERS OF SUPPLY AND DEMAND
THAT IMPACTS COST. SPX 12
MISGUIDING LEE FOCUSES ON
PROFITS RATHER THAN THE ROOT
CAUSE OF PRICE IN SPIKES,
SHORTAGES AND LACK OF AVAILABLE
SUPPLY. DUE TO CALIFORNIA'S
UNIQUE FUEL BLEND AND GEOGRAPHIC
ISOLATION. PRICE CAPS, TAXES TAX
, LIKE PENALTIES DO NOT INCREASE
SUPPLY. THEY DON'T REDUCE PRICE
, BUT INSTEAD THEY HAVE THE
OPPOSITE EFFECT OF REDUCING
SUPPLY AND INCREASING COST. THE
FOCUS OF THE SPECIAL SESSION
SHOULD BE ON PROVIDING RELIEF TO
CALIFORNIANS TO ENSURE THAT
ONGOING ACCESS TO AFFORDABLE AND
RELIABLE FUEL EVERYWHERE TO
EVERYONE ALL THE TIME AS THE
STATE TRANSITIONS TO LOWER
CARBON ECONOMY, BUT THE SPECIAL
SESSION HAS NOW BECOME A RUSH ON
POLICY THAT UNFORTUNATELY, WILL
NOT PROVIDE THE RELIEF TO
CALIFORNIA'S BECAUSE THERE HAS
NOT BEEN ENOUGH DISCUSSION AND
THERE IS FAILURE TO ADDRESS THE
ROOT CAUSE WHICH IS ADEQUATE
SUPPLY. WE STAND READY TO
ADDRESS THE REAL ISSUES THAT ARE
IMPACTING THE PAIN AT THE PUMP.
THEY INCLUDE ADEQUATE SUPPLY
REFINING CAPACITY,
INFRASTRUCTURE AND STORAGE VERY
MUCH HELP. HOPE COMMISSIONER
GUNDA INCLUDES IN THE FUELS
TRANSITION STUDY THESE EXTREMELY
IMPORTANT ELEMENTS. AND THERE
HAS BEEN NO MATTER WHAT HAS BEEN
SAID LITTLE CONSULTATION WITH
WHISPER OR THE INDUSTRY IN
CRAFTING SPX 1-2. WHEN WE
RECEIVE THESE AMENDMENTS ON
MARCH 20TH. IT WAS THE FIRST
TIME WE SAW THE LANGUAGE THAT
WAS CALLED A DEAL. AS THE
LEGISLATURE IS AN EQUAL BRANCH
OF GOVERNMENT AGAIN. WE IMPLORE
THAT YOU TAKE THE TIME TO MAKE
SURE WE GET THIS RIGHT BECAUSE
THERE'S TOO MUCH AT STAKE NOT TO
THERE IS NO EVIDENCE TO SUPPORT
THE BILLS, FINDING OR ASSERTION
OR DECLARATION THAT REFINERS
ENGAGED IN PRICE COUCHING IN THE
THIRD QUARTER OF 2022 PURPORTED
MARKET MANIPULATION BY REFINERS
HAS BEEN STUDIED AND
INVESTIGATED REPEATEDLY. I'VE
BEEN THROUGH MANY OF THE
INVESTIGATIONS PERSONALLY GIVEN
ITS MY 40TH YEAR IN THE
INDUSTRY. AS A CALIFORNIA ENERGY
COMMISSION AND SEVERAL STATE
ATTORNEY GENERALS HAVE
REPEATEDLY ACKNOWLEDGED THERE IS
NO SIMPLY NO EVIDENCE THAT
REFINERS MANIPULATE THE FUEL
SUPPLY TO CAUSE PRICE SPIKES.
RATHER CALIFORNIA IS SUBJECT TO
CONSTRAINTS OF CRUDE OIL,
GASOLINE, DIESEL AND JET FUEL
DUE TO PUBLIC POLICY. I'M NOT
SAYING THE PUBLIC POLICY IS NOT
MERITORIOUS. BUT THERE'S BEEN
LITTLE DISCUSSION HERE TODAY
ABOUT THE OTHER ELEMENTS THAT WE
SHOULD BE TALKING ABOUT. THE
SUPPLY CONSTRAINTS COUPLED WITH
THE DEMAND BY THE WORLD'S FOURTH
LARGEST ECONOMY AND 35 MILLION
INTERNAL COMBUSTION ENGINE
VEHICLES, ARE THE PRIMARY
DRIVERS OF FUEL COSTS IN THE
STATE. THE ENERGY COMMISSION
THEMSELVES HAS STATED REPORTEDLY
TAXES, PRODUCTION COSTS,
ENVIRONMENTAL COSTS, BLENDS AND
ISOLATION HAS BEEN THE CAUSE. I
HAVE BEEN THROUGH EIGHT
INTEGRATED ENERGY POLICY REPORTS
FONDLY KNOWN AS THE HYPER UM,
COMMISSIONER GUNDA IS GOING
THROUGH ONE AS WE SPEAK THAT
LOOKS AT THE FUEL. ISSUES THAT
WERE TAUGHT. WE SHOULD BE
TALKING ABOUT TODAY AND IN EVERY
ONE OF THOSE, IT CONCLUDED IT
WAS SUPPLY CONSTRAINTS,
INFRASTRUCTURE REFINING CAPACITY
TO WHICH WE HAVE STILL NOT
ADDRESS SINCE THE HYPER IN 2000.
AS AMENDED. THIS BILL STILL
PROPOSES THE SAME CONCEPT OF
TAXING AND PENALIZING THE
INDUSTRY. BUT NOW IT'S SHIFTING
TO EMPOWER THAT TO THE OFFICIALS
OF THE CALIFORNIA ENERGY
COMMISSION WHO ARE UNELECTED WHO
ARE NOT ACCOUNTABLE TO VOTERS TO
IMPLEMENT THIS UNTESTED
EXPERIMENT. EMPOWERING THE C E C
AND GIVING THEM THE AUTHORITY TO
TAX AND PENALIZED, REFINERS WILL
LIKELY LEAD TO THE SAME
UNINTENDED CONSEQUENCES WE FEEL
AS THE GOVERNOR'S INITIAL
PROPOSAL, LESS INVESTMENT LESS
SUPPLY. HIGHER GASOLINE PRICES
IN CALIFORNIA. GIVEN THE
LEGISLATORS AUTHORITY TO THE C E
C TO SET A MAXIMUM GROSS
GASOLINE REFINING MARGIN AND TO
DEVELOP PENALTIES FOR REFINERS
THAT GO ABOVE THOSE MARGINS IS
EFFECTIVELY ATTACKS. IT GIVES US
EEC VERY BROAD AUTHORITY TO
ADOPT THIS TAX AT ANY TIME
WITHOUT REGULATION BY SIMPLY AN
ORDER OF THE COMMISSION. THE
BILL LACKS CLARITY AROUND THE
TIMING AND THE INFORMATION THAT
IS SUPPOSED TO INFORM THE
COMMISSION'S DECISION ON WHETHER
OR NOT THEY THINK THE GOVERNOR'S
TAX PENALTY IS A GOOD IDEA OR A
BAD ONE. IF IT'S IMPLEMENTED. IF
THIS POLICY IS IMPLEMENTED, IT
COULD LEAD TO POTENTIAL SUPPLY
REDUCTIONS. HIGHER COSTS JOB
LOSSES, ESPECIALLY FOR UTILIZED
LABOR POTENTIAL REDUCTION NOT
ONLY OF GASOLINE, BUT DIESEL AND
JET FUEL, REDUCED FUNDING FOR
SCHOOLS AND GO UP WITH LOCAL
GOVERNMENTS. GREATER RELIANCE ON
EXPENSIVE AND UNCERTAIN SUPPLIES
OF FOREIGN IMPORTS TO MEET
DEMAND, INCREASING THEIR
FREQUENCY AND DURATION OF PRICE
SPIKES BECAUSE OF CALIFORNIA'S
ISOLATION AND REDUCED CAPITAL
FOR REFINERY INVESTMENT. THAT
POTENTIAL REFINERY CLOSURES
COULD RESULT IT REQUIRES VERY
EXTENSIVE NEW INFORMATION TO
REPORT IT TO THE C E. C ON
PLANNED AND UNPLANNED
MAINTENANCE. BUT UNFORTUNATELY,
THE BILL ALSO GIVES THE CE
THEATER AUTHORITY TO DICTATE
WHEN A REFINERY CAN AND CANNOT
DO CRITICAL MAINTENANCE DEEMED
NECESSARY ABSOLUTELY NECESSARY
TO ENSURE SAFE AND EFFICIENT
OPERATIONS. CREATING NEW RISKS
FOR HEALTH AND SAFETY OF
EMPLOYEES AND SURROUNDING
COMMUNITIES, PLANNED TURNAROUNDS
AND MAJOR MAINTENANCE INVOLVES
YEARS OF PLANNING. IF WE HAD HAD
DISCUSSIONS ON THIS BILL, WE
COULD TALK ABOUT HOW WE HAVE TO
GO THROUGH AND WHAT WE HAVE TO
GO THROUGH TO ESTABLISH
TURNAROUNDS AND MAJOR
MAINTENANCE EVENTS. WE HAVE TO
ACQUIRE FUEL TO FULFILL
CONTRACTS. WE HAVE TWO
COORDINATES THOUSANDS OF SKILLED
AND TRAINED WORKERS TO REPAIR OR
REPLACE THE COMPLEX UNITS THAT
ARE NEEDED TO PRODUCE GASOLINE,
DIESEL JET FUEL AND MANY OTHER
PRODUCTS THAT CALIFORNIA USED
EVERY DAY. AND THIS BILL AS AN
ADDITIONAL LAYER OF COMPLEXITY
FOR COUNT FOR COMPANIES TO
ENSURE REFINERIES CAN OPERATE
SAFELY. IT ALSO REQUIRES THE CEO
OR HAS THE TELE REFINER WHEN
THEY CANNOT PERFORM MAINTENANCE
THAT COULD CREATE A LEGAL
QUESTION ON WHO ULTIMATELY IS
LIABLE IF I REFINERY HAS BEEN
TOLD TO NOT DO MAINTENANCE, AND
THEN SOMETHING GOES WRONG.
PROPERTY IS DAMAGED AND GOD
FORBID SOMEONE IS INJURED. THIS
BILL SUBSTANTIALLY EXPANDS THE
AMOUNT OF DATA. I THINK MY
COLLEAGUE WILL BE DISCUSSING
THIS THAT IS REQUIRED TO BE
REPORTED TO THE C E. C UNDER
PIRA THAT INCLUDES DAILY
REPORTING AND ADDS AN ADDITIONAL
LEVEL COMPLEXITY FOR REFINERS.
NON REFINERS. COPIES OF
CONTRACTS AGREEMENTS NEW
REPORTING OBLIGATIONS TO
PIPELINE OPERATORS. PETROLEUM
PRODUCT MARKETERS, TERMINAL
OPERATORS, SUPPORT OPERATORS,
OIL PRODUCERS AND IMPORTERS OF
REFINED PRODUCT. VIA MARINE
TERMINAL. THERE ARE ROUGHLY
10,000 RETAIL LOCATIONS IN
CALIFORNIA 60 DISTRIBUTION
TERMINALS, SEVERAL ENTITIES THAT
EACH OF THOSE LOCATIONS NEARLY
5000 DISTRIBUTION TRUCKLOADS
EVERY SINGLE DAY FOR FINISHED
GASOLINE AND DIESEL. SO THIS
WOULD NOW REQUIRE ALL OF THAT
EVERY CONTRACT. EVERY
TRANSACTION TO BE REPORTED TO
THE C E. C. THERE WILL BE
HUNDREDS OF THOUSANDS, IF NOT
MILLIONS OF DOCUMENTS THAT THE
CC WILL NEED TO COLLECT, AND IT
IS UNCLEAR HOW THIS DATA WILL BE
QUANTIFIED IF WE CAN EVEN DO IT
OR IF THEY CAN EVEN DO IT AND
WHAT BENEFIT WILL HAVE FOR THE
MARKET AND CONSUMERS AGAIN? ALL
COULD HAVE BEEN DISCUSSED IF
THERE WAS ADEQUATE TIME TO
ADDRESS THIS BILL, AS IT SHOULD
HAVE BEEN, RATHER THAN RUSHING
IT THROUGH THE PROCESS, WHICH WE
ARE DOING NOW. IT ALSO AMENDS A
ALSO AMENDS SP 13 22 FROM LAST
YEAR. NOW INCLUDE A NET GASOLINE
REFINERY MARGIN, WHICH MEANS THE
GROSS GASOLINE REFINING MARGIN
MINUS ANY REFINERY OPERATING
COSTS. NOW. UNFORTUNATELY IT
DOESN'T CAPTURE OTHER COSTS THAT
ARE ASSOCIATED WITH REFINING.
LIKE OTHER REGULATORY PROGRAMS,
ADMINISTRATIVE COSTS, BRANDING
DEPRECIATION, HEDGING THE RISK
OF DOUBLE COUNTING SALES AND
VOLUMES, MANY, MANY, MANY
DETAILS AGAIN, WHICH WE COULD BE
DISCUSSING, AND HOPEFULLY WE
WILL IF GIVEN MORE TIME. GIVEN
WHISPERS HISTORY WITH THE SEA EC
COMMISSIONER GUNDA I HAVE GONE
BACK AND FORTH ON THIS OVER THE
LAST MONTH. UM THEY HAVE NOT
PROVIDED THE GUIDANCE WE BELIEVE
WAS ESSENTIAL TO THIS INDUSTRY
FOR REPORTING DATA UNDER SP 13
22. AND SO WE DO NOT HAVE GREAT
CONFIDENCE THAT WILL BE GIVEN
ADDITIONAL GUIDANCE ON HOW TO
REPORT UNDER SPX DASH ONE. I WAS
APPALLED THAT WE WERE, UM,
DENIED OUR PETITION AND WHISPER
REALLY ASKS FOR A RULEMAKING,
WHICH WE DID BECAUSE WE WANTED
TO ENSURE GREATER TRANSPARENCY
ENSURE DATA WAS GIVEN TO THE
ENERGY COMMISSION NOT GIVEN IN
DIFFERENT INTERPRETATIONS BY OUR
MEMBERS THAT DIDN'T THAT
PETITION WAS DENIED. NOT ONCE
BUT TWICE. IT ALSO REQUIRES. THE
BILL ALSO REQUIRES REFINERS IN
THE STATE TO REPORT TO THE CTC
AT LEAST 12 MONTHS IN ADVANCE.
IF A REFINERY OPERATOR INTENDS
TO PERMANENTLY SHUT DOWN, SHUT
DOWN TO RECONFIGURE OR SELL A
REFINERY IN A TRANSACTION THAT
MAY RESULT IN A REFINERY,
SHUTTING DOWN A RECONFIGURING
AND GIVEN THE STATE OF
CALIFORNIA HAS BEEN IN THE
BUSINESS OF TRYING TO SHUT DOWN
REFINERIES IN CALIFORNIA AS THE
STATE HAS GONE FROM OVER 30
REFINERS DOWN TO NINE THAT
PROVIDE TRADITIONAL
TRANSPORTATION FUELS. WE WILL
SOON BE DOWN TO EIGHT BY THE END
OF THE YEAR. IT IS HARD TO
BELIEVE THAT THE C E C. COULD
REPORT TO THE LEGISLATURE ON THE
SHUTDOWN, CONVERSION OR SALE OF
A REFINERY WITHOUT POTENTIALLY
DISCLOSING WHICH REFINERY HAS
THOSE PLANS GIVEN THERE ARE SO
FEW LEFT IN THE STATE. THIS VERY
REPORT COULD CREATE POTENTIAL
UNFAIR COMPETITIVE DISADVANTAGES
OR COULD ADVERSELY AFFECT MARKET
COMPETITION. SO AS I CLOSE I'D
LIKE YOU JUST TO CONSIDER THE
PRESIDENT OF THIS APPROACH, EVEN
IF YOU DON'T LIKE OUR INDUSTRY.
OR PERHAPS YOU LIKE THE IDEA OF
PENALIZING US. I ASK YOU AND I
ASK YOURSELF WHAT INDUSTRY MIGHT
BE NEXT TO BE SUBJECT TO THIS
TYPE OF GOVERNMENT CONTROL. WHAT
KIND OF PRECEDENT FOR STATE
MANAGEMENT OF AN ENTIRE ECONOMIC
SECTOR FOR THIS BILL, BE SETTING
WHO WOULD BE NEXT? AND SO FOR
ALL THESE REASONS AND STAYED
ABOVE WE STRONGLY OPPOSE SB X
1-2. WE ASKED THE LEGISLATURE AT
A MINIMUM AT A MINIMUM TO SLOW
THE PROCESS DOWN. TO SLOW THE
PROCESS DOWN TO NOT RUSH THIS
BILL SO THAT A FULL VETTING OF
THESE DETAILS THESE EXTREMELY
IMPORTANT DETAILS TO AN
EXTREMELY TIGHT TRANSPORTATION
MARKET THAT IS EXTREMELY
VULNERABLE TO UPSET. TO SUPPLY
FUEL EVERY SINGLE DAY TO 40
MILLION PEOPLE WHO DRIVE
30,000,035 MILLION INTERNAL
COMBUSTION ENGINES. THAT'S NOT
GOING TO STOP TOMORROW, AND IT'S
NOT GOING TO STOP STOP IN THE
NEAR FUTURE, AND IT'S NOT EVEN
GOING TO STOP IN 2035. WHEN THE
SALE OF NEW ENGINES ARE BANNED,
WE WILL STILL HAVE A BOATLOAD,
VERY TECHNICAL TURN BOATLOAD OF
INTERNAL COMBUSTION ENGINES THAT
WE STILL HAVE TO SUPPLY FUEL
FROM THESE REFINERS EVERY SINGLE
DAY. WE CANNOT AFFORD TO LOSE
ANOTHER REFINERY IN THIS STATE.
AND EVERY SIGNAL THAT THE STATE
OF CALIFORNIA SENDS IS TO NOT
INVEST AND WHEN YOU DON'T INVEST
AND YOU HAVE RESTRICTIONS ON
SUPPLY. YOU HAVE IMPACT ON
PRICE. SO MY PLEA TODAY IS TO
ASK FOR MORE TIME SO THAT WE AS
AN INDUSTRY ACTUALLY CAN BE
BROUGHT INTO THIS CONVERSATION
THAT WE ACTUALLY CAN TALK ABOUT
THESE DETAILS AND THAT WE CAN
COLLECTIVELY WORKED TO IMPROVE
UPON WHAT IS IN PRINT TODAY.
THANK YOU. THANK YOU VERY MUCH.
WE'LL MOVE ON TO THE NEXT
PRESENTER. THANK YOU, MR CHAIR
AND APPRECIATE YOU PICKING ME TO
GO AFTER THAT JOHN WINGER HERE
FOR THE CALIFORNIA FUELS
INCONVENIENCE ALLIANCE. WE MAKE
UP THE FUEL SUPPLY CHAIN BELOW
THE REFINERY LEVEL, SO THAT
INCLUDES FUEL TRANSPORT AND
RETAIL GAS STATIONS, WHICH ARE
PRIMARILY SMALL FAMILY AND
MINORITY OWNED BUSINESSES. UM,
HISTORICALLY. CALIFORNIA HAS
ALWAYS HAD HIGHER GAS PRICES,
TAXES, ENVIRONMENTAL COSTS,
HIGHER LAND COSTS. UM, THAT'S
NOT DISPUTED IN THE LAST DECADE
, WE'VE DEFINITELY SEEN THAT GAP
WIDEN, AND WE'VE SEEN A LOT MORE
PRICE VOLATILITY. NONE OF THAT
CURRENT SITUATION IS REALLY
SURPRISING TO US STATE POLICIES
HAVE REDUCED HER REFINERY
CAPACITY, WHICH WAS JUST
DISCUSSED. AND HAS STRANGLED
SUPPLY IN THE STATE, WHICH, WHEN
YOU HAVE NO SLACK IN THE SYSTEM,
IF YOU HAVE AND DISCLOSURE
UNKNOWN, UH, DISRUPTIONS THAN
YOUR LEADING TO MORE RELIANCE ON
THE SPOT MARKET WITH IMPORTED,
UH, CAR BOB COMPLIANT GASOLINE,
AND SO THAT'S SUBJECT TO TRADERS
SUBJECT TO PRICE VOLATILITY,
WHICH WE HAVE WE HAVE SEEN. I
WOULD ALSO BE REMISS IF I DIDN'T
MENTION THAT. YOU KNOW THIS PINE
DEMAND IMBALANCES. UM NOT REALLY
GOING TO BE FIXED ANYTIME SOON
IF WE DON'T CONTINUE TO EMBRACE
ALTERNATIVE FUELS AND ONLY STICK
TO EVEY VEHICLES, AND SO AS WE
MOVE FORWARD WITH STATE ENERGY
POLICY IN GENERAL, I WOULD, UH I
WOULD ENCOURAGE THE LEGISLATURE
TO LOOK AT ALTERNATIVE FUELS TO
HELP REDUCE THE DEMAND AND BRING
THAT IN THAT BACK TO BALANCE. ON
THE RETAIL SIDE IN THE LAST
DECADE. WE'VE CERTAINLY SEEN A
SIGNIFICANT INCREASE IN FIXED
COSTS FOR OUR MEMBERS, LABOR
COSTS HAVE GONE UP SIGNIFICANTLY
, WE HAVE TO COMPLY WITH 42
DIFFERENT STATE AND LOCAL
AGENCIES WITH REDUNDANT AND, UH
AND UNNECESSARY REPORTING
REQUIREMENTS. WE HAVE M V
UPGRADES. WE HAVE INCREASED
COSTS AND TRUCKING REGULATIONS
ARE UTILITY COSTS ARE GOING UP.
SWIPE FEES HAVE INCREASED
DRAMATICALLY IN THE LAST FEW
YEARS. UM AND SO WE KEEP SEEING
MORE AND MORE FIXED COSTS. THIS
KEEPS GETTING DISCUSSED AS THE
MYSTERY SURCHARGE IS NOT REALLY
A MYSTERY. IT'S JUST INCREASED
COST OF DOING BUSINESS FOR OUR
FOR OUR MEMBERS, AND WE'RE GOING
TO CONTINUE TO SEE, AS MR
BERNSTEIN NOTED MORE SHIFTING TO
THE BRANDED STATIONS BECAUSE A
LOT OF OUR INDEPENDENT STATION
OWNERS CAN'T KEEP TAKING ON ALL
OF THESE MANDATES. ALL OF THESE,
UH CHANGES IN LAW OF THE YOU
KNOW, POLKA LAWSUITS COMING
ALONG MAINTENANCE THAT WE NEED
TO DO. UM AND SO HAVING THAT
BRANDED AGREEMENT CAN HELP WITH
, UH, WITH PROTECTING AGAINST
SOME OF THAT AND GETTING SOME
HELP FROM A FROM A CORPORATE. UH
YEAH OIL COMPANY, AND SO WE'RE
SEEING A SHIFT OF BRANDED. WE'RE
SEEING A REDUCTION IN
COMPETITION. UM THERE'S A 11 NEW
GAS STATION BANDS NOW IN THE
STATE, AND THAT'S CONTINUING TO
GROW. AND SO, UM, CERTAINLY
CONCERNED WITH WITH WITH THE
PRICE VOLATILITY IN THE MARKET.
WE DEFINITELY DON'T THINK SBX
1-2 CURRENTLY WOULD SOLVE THAT
PROBLEM. UM I THINK THE PENALTY
WAS DISCUSSED ABOUT HAVING
UNINTENDED CONSEQUENCES ON
SUPPLY. WE SAW THAT IN THE 19
SEVENTIES WITH US INSTITUTED
PRICE CONTROLS, WHICH LED TO
LONG LINES AND RATIONING. WE SAW
THAT IN THE 19 EIGHTIES WITH A
CRUDE OIL WINDFALL PROFIT TAX,
WHICH REDUCED SUPPLY AND
INCREASED PRICES. ADDITIONALLY
UM SPECIFICALLY TO XP SP X 1-2.
IT HAS A LOT OF NEW REPORTING
REQUIREMENTS ON MARKETERS.
MARKETERS IS A VERY BROAD
DEFINITION, WHICH GOES ALL THE
WAY DOWN TO AN INDIVIDUAL
STATION OWNER. OUR OWNERS.
THEY'RE STILL TRYING TO REVIEW
THE LANGUAGE. IT'S ONLY BEEN IN
PRINT FOR TWO DAYS. BUT THE
INITIAL REACTION IS, HOW ARE WE
GOING TO COMPLY WITH THIS? UM
FOR OUR MEDIUM SIZED FOLKS, THEY
WOULD HAVE TO HIRE A SIGNIFICANT
AMOUNT OF MORE STAFF SIGNIFICANT
AMOUNT OF CONSULTANTS JUST TO
FIGURE OUT A WAY TO COMPLY,
WHICH IS JUST GOING TO ADD MORE
AND MORE TO THAT FIXED COSTS. ON
TOP OF THE PRICE OF CASA LEAN,
AND SO, UH, WE'RE CERTAINLY
CONCERNED WITH THE CURRENT
LANGUAGE. WE THINK IT'S GOING TO
INCREASE COSTS, ESPECIALLY FOR
OUR MEMBERS, WHICH IS GOING TO
GET PASSED ON AT THE PUMP. AND
SO WE WOULD CERTAINLY ENCOURAGE
THE LEGISLATURE TO SLOW DOWN THE
PROCESS. WE WOULD LOVE TO BE A
PART OF THE PROCESS AND
DISCUSSING AND WOULD WOULD ALSO
ENCOURAGE THE LEGISLATURE TO
LOOK AT SUPPLY STABILIZING
SUPPLY WHEN THERE'S AN
UNEXPECTED INTERRUPTIONS,
LOOKING AT DEPLOYING ALTERNATIVE
FUELS ARE REDUCED DEMAND AND
THEN ALSO LOOKING AT THE
REDUNDANT, SOMEWHAT UNNECESSARY
REGULATIONS THAT ARE GETTING
PLACED ON OUR ON OUR RETAIL
MEMBERS. I THINK THERE'S A LOT
WE COULD CLEAN UP THERE IF WE
HAD THE TIME TO DISCUSS IT, SO
WE WELCOME THE CONVERSATION AND
HAPPY TO ANSWER ANY QUESTIONS.
THANK YOU VERY MUCH. WE HAVE OUR
LAST PRESENTER. I COULD GET MY
SLIDES UP. THAT'D BE GREAT. UM
I'M JAMIE COURT. I'M PRESIDENT
OF CONSUMER WATCHDOG. UM.
SOMEONE WORKING THE SLIDES OR
THERE WE GO. THANKS. UM I'VE
BEEN WATCHING THE GAS MARKET FOR
22 YEARS I WAS APPOINTED TO
REPRESENT THE ASSEMBLY, ACTUALLY
, BY ANTONIO VIRAGO, PSA ON THE
ATTORNEY GENERAL'S GAS PRICING
TASK FORCE AT THE TIME BILL
LOCKYER'S SO I LEARNED ABOUT GAS
PRICING THEN AND I'VE SEEN THIS
MARKET OVER THE LAST 2.5 DECADES
TO TWO DECADES. UM THE BIG
PROBLEM WE HAVE IS CONSOLIDATION
. WE HAVE FIVE OIL REFINERS NOW
MAKING 98% OF THE GASOLINE IN
THE STATE, AND WHEN THEY WANT TO
SQUEEZE US THEY CAN AND WHAT
THIS BILL GETS AT IS THE
DIFFERENT WAYS THEY SQUEEZE US.
NEXT SLIDE, PLEASE. THIS YEAR,
WE WERE SQUEEZED REALLY
INTENSELY. WE HAVE NEVER
EXPERIENCED THIS TYPE OF GAP
WITH GAS PRICES WITH US BEFORE
$2.60 GAP, IT'S UNPRECEDENTED.
NEXT SLIDE, PLEASE. THE LAST
TIME WE FACED A BIG GAP. IT WAS
AFTER THE EXPLOSION AND TORRENTS
OF THE EXXON REFINERY. IT WAS
ABOUT A DOLLAR. $50.60 WAS THE
BIGGEST GAP AND THERE WAS A
REASON FOR IT. NOW WE'RE AT
$2.60. ALL THE SAME
ENVIRONMENTAL FORMULAS ARE IN
PLACE ALL THE SAME TAXES AND
WE'RE AT $2.60 DIFFERENCE IF YOU
ADD THE COST OF WHY WHAT
CALIFORNIA GASOLINE SHOULD BE
PRICED AT, BASED ON THE LOW
CARBON FUEL, STANDARD CAP CAP
AND TRADE STANDARD WE GET TO IN
MY CALCULATIONS, 69 CENTS AND
SEVERANCE CALCULATION. 80 CENTS.
NOT $2.60 DIFFERENT FROM US GAS
PRICES. IT'S UNHEARD OF NEXT
SLIDE, PLEASE. AND WHERE DOES
THIS TAKE ITS TOLL THE MOST. IT
TAKES ITS TOLL ON MOST ON LOW
INCOME WORKERS AT $4 A GALLON A
MINIMUM WAGE WORKER PAYS 9% OF
THEIR OUT OF POCKET INCOME AND
GAS AT $6, A GALLON WHICH WE
TRANSGRESS THAT THIS YEAR THEY
PAY 13% OF THEIR OUT OF POCKET
INCOME. SO THESE ARE THE PEOPLE
WHO PROTECTING THIS IS WHY WE'RE
ACTING QUICKLY. WE'RE ACTING
QUICKLY BECAUSE WHAT HAPPENED
THIS YEAR CAN'T HAPPEN AGAIN.
AND WHEN YOU SEE WHERE THOSE
PROFITS WHAT HAPPENED, WHY DID
WE PAY THOSE PRICES? IT SHOWS UP
IN THE PROFITS REPORTS NEXT
SLIDE, PLEASE. THE FIVE BIG OIL
REFINERIES IN THE FIRST THREE
QUARTERS NEARLY QUADRUPLED
PROFITS FROM THE FIRST THREE
QUARTERS OF LAST YEAR. 67
BILLION VERSUS 17 BILLION. NEXT
SLIDE, PLEASE MORE GRANULAR, ALY
. WE LOOKED AT THEIR REFINING
PROFITS PER GALLON. THESE ARE
GROSS REFINING MARGINS, AS
REPORTED. TWO. I KNOW IT'S HARD
TO SEE, BUT YOU CAN TAKE MY WORD
FOR IT. UM YOU I'LL GIVE YOU A
COPY LATER. UM THE THESE ARE
GROSS REFINING ORIGINS FOR THE
LAST 20 YEARS, AS REPORTED BY
THE OIL REFINERS THEMSELVES TO
THEIR INVESTORS IN THE WEST
COAST SLASH CALIFORNIA. SO
YOU'LL SEE THE AVERAGE OVER THE
LAST 20 YEARS WITH 32 CENTS PER
GALLON THEY MADE AS A GROSS
REFINING MARGIN. THIS LAST YEAR
IF YOU GO TO THE NEXT SLIDE UM
ALL OF THEM. BROKE THE 50 CENT
MARGIN BY AN AWFUL LOT. ONLY
THREE TIMES IN THE LAST 3RD 20
YEARS HAVE ANY REFINERS BROKE
THAT 50 CENT PER GALLON MARGIN
ON AN ANNUAL BASIS. ALL THREE
TIMES IT WAS CHEVRON THIS YEAR.
THEY ALL BROKE IT, AND THEY
BROKE IT BY AN AWFUL LOT. UH
NEXT SLIDE AN AVERAGE OF 66
CENTS PER GALLON IF YOU ALL
TOTAL ALL OF THE REFINING
MARGINS FOR ALL THE REFINERS IN
THE WEST, AND THAT'S SO IT'S
DOUBLE THEIR AVERAGE REFINING
MARGIN. THAT'S WHERE THAT EXTRA
WE'RE PAYING AT THE PUMP GOES,
AND THERE'S NO QUESTION THAT
THAT'S WHERE IT WENT. BECAUSE
THIS IS THEIR REFINING MARGINS.
IT ONE DIDN'T GO TO THE DEALERS,
THEN GO TO THE GAS STATIONS.
THIS IS THE MARGINS THAT IS PAID
OR MADE AT THE REFINERY, THE
DIFFERENCE BETWEEN THE PRICE OF
CRUDE OIL AND THE PRICE OF
GASOLINE ON THE OTHER SIDE, SO
IT'S EMPIRICAL FACT THAT THEY
DOUBLE THEIR MARGINS NEXT SLIDE
. THEY ALSO MADE IF YOU LOOK AT
THEIR MARGINS ANYWHERE IN THE
WORLD IN THE U. S VERSUS
CALIFORNIA, THEY MADE 30% MORE.
PROFIT ON THEIR MARGINS IN
CALIFORNIA ANYWHERE ELSE. 30%
MORE. ITS PROFIT. IT'S NOT TAXES
, NOT ENVIRONMENTAL CARBON
TAXES. IT'S PROFIT. THAT'S
THAT'S JUST THEIR NEXT SLIDE.
THIS SHOWS THE DIFFERENCE
BETWEEN THE STRAIGHT LINE IS THE
IS THE PROFITS EVERYWHERE ELSE
AND HAVE DIED IN LINE IS THE
PROFITS IN CALIFORNIA AGAIN?
THIS IS RIGHT OUT OF THEIR OWN
INVESTOR REPORTS, WHICH ARE
AUDITED INVESTOR REPORTS. NEXT
LINE, SO WE WANTED TO GET AN
IDEA OF IF WE HAD TO HAVE A
REBATE OF PRICE GOUGING, REBATE
OR PRICE GOUGING PENALTY. HOW
MUCH WOULD IT HAVE COME TO LAST
YEAR? IF WE DREW THAT LINE OF 50
CENTS PER GALLON, WHICH IS
PRETTY HIGH AGAIN? ONLY THREE
TIMES IN THE LAST 20 YEARS HAS
ANYONE CROSSED IT AND WE FOUND
FOR FOUR OF THE FIVE REFINERS.
WE'RE LOOKING AT $1.8 BILLION
THAT WOULD BE WHAT THAT PENALTY
WOULD BE IF WE HAD APPLIED IT
NEXT SLIDE. UM AND, UH AND
THAT'S FOR FOUR OF THE FIVE
REFINERS. I'LL GET TO CHEVRON A
MOMENT. UM WHY NEXT SLIDE,
PLEASE. WHY CREATE A WHITE
CREATIVE PRICE GOUGING PENALTY?
WHY DO IT? IT CREATES PRICE
CONSISTENCY, BECAUSE WHEN YOU
LIMIT THE PRICE SPIKES THE
SPIKES THAT CAN OCCUR ON THESE
BIG PRICE SPIKES, YOU LIMIT THE
ABILITY FOR PRICES TO GO UP
SIGNIFICANTLY IN A SHORT TIME
THAT CREATES PRICE CONSISTENCY.
YOU DETER PROFITEERING. YOU
LEVEL THE PLAYING FIELD AND YOU
ALSO PREVENT OIL REFINERS FROM
UNDERMINING ENVIRONMENTAL LAWS,
WHICH IS WHAT WE BELIEVE
HAPPENED THIS YEAR. WE BELIEVE
THEY RAISED PRICES AS AN ATTEMPT
TO UNDERMINE CALIFORNIA'S LOSS.
NEXT SLIDE, PLEASE NOW AFTER THE
GOVERNOR ANNOUNCED THE PRICE
GOUGING PENALTIES AND THE
SPECIAL SESSION SOMETHING
INTERESTING HAPPENED. THESE ARE
QUARTERLY PROFITS, SO THEY'RE
THEY'RE ADVERTISED OVER A
QUARTER BECAUSE WE ONLY HAVE
QUARTERLY PROFITS UNTIL SB 13 22
KICKS IN, WE WILL HAVE MONTHLY
PROFITS. BUT THIS SHOWS THAT
AFTER THE GOVERNOR ANNOUNCED THE
PENALTY, VALERO'S PROFITS TOOK A
NOSEDIVE. WENT FROM ALMOST FROM
60 CENTS OR TWO DOWN THE 36
CENTS, WHICH IS THIS HISTORICAL
NORM NEXT SLIDE, AND NOT ONLY
THAT THEIR PROFITS PER GALLON
EVERYWHERE ELSE IN THE WORLD AND
THE NATION HAVE TRADITIONALLY
AND ALL THE OTHER QUARTERS WERE
LOWER THAN IN CALIFORNIA,
CALIFORNIA'S THE HIGHEST BUT IN
THE FOURTH QUARTER. SUDDENLY.
NOW CALIFORNIA IS THE LOWEST, SO
SOMETHING HAPPENED IN THEIR
BEHAVIOR. NEXT SLIDE. PBF
FOLLOWS THE SAME PATTERN. AND
CHEVRON NEXT SLIDE SHOW.
EVERYONE FOLLOWS THE SAME
PATTERN. BUT CHEVRON'S
EXTRAORDINARY CIRCUMSTANCE,
CHEVRON HAD AN 85 CENTS PER
GALLON PROFIT. FOR THE ENTIRE
YEAR, WHICH IS EXTRAORDINARY.
LAST TIME IT HAD ANYTHING LIKE
THAT WAS 65. CENTS IN THE WAKE
OF TORRANCE REFINERY EXPLOSION
IN 25. SO THEIR THEIR PROFITS
TOOK A SLIGHT DIVE. NEXT NEXT
SLIDE. IF YOU APPLY THE PENALTY
, THE CHEVRON AT THE 50 CENT
LINE, WE HAVE 1.4 BILLION IN
PENALTIES FOR CHEVRON NEXT SLIDE
. AND IF YOU ADD THE CHEVRON
PENALTIES, THE OTHER FOUR
FOUNDERS, YOU'D HAVE A TOTAL OF
3.1 BILLION. THAT'S JUST SAYING
AT THE 50 CENT PER GALLON LINE.
THAT'S HOW MUCH EXTRA WE WERE
CHARGED AND WE COULD DETER IT IF
WE CUT IF WE PUT A LINE AT 50
CENTS PER GALLON. NEXT SLIDE.
NOW WE ALSO DID A LITTLE
RESEARCH INTO WHERE THAT MONEY
WENT IN TERMS OF THE EXECUTIVES.
AND REMARKABLY, THE EXECUTIVES,
DIRECTORS AND INSIDERS OF THE
FIVE BIG OIL REFINERS CASHED OUT
$590 MILLION IN STOCK DURING
2022. WHICH IS UNHEARD OF
EXTRAORDINARY. CHEVRON
EXECUTIVES AND DIRECTORS CASHED
OUT $150 MILLION. ONE FAMILY.
ONE INSIDER FAMILY. IT WAS THE
ONLY INSIDE ON THIS LIST OF PBF.
SLIM FAMILY CASHED OUT 350
MILLION RIGHT AFTER THE
UKRAINIAN WAR TOOK ON. SO THAT
WAS NOT A GRANT. BUT IT IS IT IS
, IT WAS, IT WAS WARTIME
PROFITEERING. SO THIS IS WHERE
OUR MONEY WENT. OUR MONEY WENT
INTO THE POCKETS OF THE
EXECUTIVES, THE DIRECTORS AND AN
INSIDER. AND WHEN YOU HAVE A
HALF BILLION DOLLARS GOING INTO
THE POCKETS OF A FEW DOZEN
PEOPLE YOU HAVE TO ASK. THIS IS
WHY WE HAVE A PRICE PACKAGING
PENALTY. THIS IS WHY WE ARE
GETTING THIS DONE IN THE NEXT 10
DAYS BECAUSE PEOPLE CANNOT
AFFORD TO PAY $6 A GALLON FOR
GAS. THAT IS WHY THE URGENCY
NEXT SLIDE. THERE'S AN
UNBELIEVABLE AMOUNT OF PRECEDENT
IN THIS BECAUSE EVERYONE SAYS
NEVER BEEN DONE BEFORE WE DID
THIS WITH THE INSURANCE
INDUSTRY. THE ENTIRE PROPERTY
CASUALTY INSURANCE INDUSTRY
OPERATES UNDER THE BASIS OF A
RATE OF RETURN. WE DID IT WITH
PROP. ONE OH, THREE, WHICH IS A
BALLOT MEASURE. I WAS INVOLVED
IN THE 1988. IT REGULATES THE
INSURANCE INDUSTRY, BUT MORE
IMPORTANTLY, IT SETS A
REASONABLE RATE OF RETURN EVERY
TIME INSURANCE COMPANIES. COME
IN FOR A RATE HIKE. THEY HAVE TO
JUSTIFY NO MORE THAN A
REASONABLE RATE OF RETURN, WHICH
IS SET BY A FORMULA. THE WHOLE
PROPERTY. CASUALTY INSURANCE
OPERATES UNDER THE SAME FORMULA
BECAUSE WE NEED INSURANCE, JUST
LIKE WE NEED GAS. AND I'LL TELL
YOU ANOTHER PRECEDENT. THE
MEDICAL LOSS RATIO UNDER
OBAMACARE EVERY HEALTH INSURANCE
COMPANY IN AMERICA CANNOT SPEND
MORE THAN 15% ON ADMINISTRATION
AND PROFIT. THAT'S THE LAW.
BECAUSE WE ALL NEED HEALTH
INSURANCE. BUT WE ALL NEED
GASOLINE TO THE POINT IS, IF YOU
SET THE PENALTY HIGH ENOUGH 50
CENTS IS PRETTY HIGH. BUT IT'S
UP TO THE SEA. YOU SEE WHAT THEY
WOULD DO UNDER THIS PROPOSAL.
YOU CREATE COMPETITION. YOU
CREATE PROFIT, BUT YOU STOPPED
THIS PIG IN THE TROUGH LEVEL WE
SAW LAST YEAR, WHICH WAS UNHEARD
OF. WE'VE NEVER SEEN ANYTHING
LIKE 2022 NEXT SLIDE. OIL
REFINERS ARE SAYING WHAT THE
INSURANCE SAID AFTER PROP ONE
OH, THREE. THESE ARE EDITORIALS
FROM 1990. THE INSURER SAID.
WE'RE GOING TO LEAVE THE STATE.
THEY SUED TO LEAVE THE STATE.
THEY GOT THE RIGHT TO LEAVE THE
STATE. THEY NEVER LEFT THE STATE
AND THE REASON THEY DIDN'T
LEAVE. THE STATE IS BECAUSE IT'S
TOO PROFITABLE HERE. WE'VE GOT A
MARKET AT 25 MILLION DRIVERS.
YOU HAVE MARKET OF 25 MILLION
DRIVERS FOR GAS. IT'S TOO
PROFITABLE TO LEAVE THE STATE.
NEXT SLIDE. THE LAST SLIDE. I'M
SHOWING YOU IS THE POPULAR
SUPPORT BEHIND THIS PROPOSAL.
MORE THAN SIX IN 10 VOTERS
BACKED THE PROPOSAL, AND THAT'S
AFTER BEING READ THE UH, THE
DETRACTORS ARGUMENTS. IT STARTS
OUT AT 64. GOES BACK UP TO 60%
AFTER THE BACK AND FORTH. THAT
WAS BEFORE THE ELECTION THIS
POLLS BEFORE THE ELECTION.
ANOTHER POLL, BY DAVID PINE
FINDER IN JANUARY FOUND THE
GROUP SUPPORTED GROWING THE 66%
AND THAT'S WHEN GAS PRICES HAVE
COME DOWN SUBSTANTIALLY SO
PEOPLE DON'T LIKE BEING GOUGED.
THE PUBLIC UNDERSTANDS WHAT
GOUGING IS. IT'S WHEN PEOPLE
MAKE TOO MUCH MONEY. OFF OF YOU.
IT DOESN'T NECESSARILY INVOLVE
MARKET MANIPULATION. BECAUSE
GETTING THAT SMOKY BACK ROOM WE
MAY NEVER GET THAT SMOKY BACK
ROOM. ALTHOUGH SOME OF THE
INFORMATION THAT WE'RE GETTING
MIGHT HELP US GET THAT SMOKY
BACK ROOM, WE SHOULDN'T HAVE TO
DEPEND ON FINDING THAT SMOKY
BACK ROOM TO PAY WHAT EVERYONE
ELSE IN AMERICA IS PAYING FOR
GASOLINE. AND THAT'S WHAT THIS
PROPOSAL IS ABOUT. IS GETTING US
LEVEL WITH AMERICA AND
PREVENTING THOSE PRICE SPIKES.
THE PRICE GOUGING PENALTY DEALS
WITH THE PRICE SPIKES. IT
DOESN'T DEAL WITH THE LONG TERM.
AH HIGHER PRICES IN CALIFORNIA
THAT 40 CENT MYSTERY SURCHARGES
HUNG ON IN 2015, BUT THESE OTHER
TRANSPARENCY PROPOSALS DO THEY
HELP US GET TO IT? SO BETWEEN
THOSE TWO COMPONENTS. THIS
PROPOSAL IS WELL BALANCED. AND I
URGE YOU TO TAKE IT UP. THANK
YOU. THANK YOU AND THANK ALL OF
THE PRESENTERS. I'M GOING TO
TURN TO THE MEMBERS UP HERE. AND
LOOK TO MY RIGHT AND START
QUESTIONS. PLEASE. THANK YOU, UM
. THANK YOU, MR COURT, AND ALL
OF THE COMMITTEE MEMBERS TODAY
IT WAS REALLY HELPFUL TO GET
THIS INFORMATION AND REALLY
ILLUMINATING, I THINK AND AH MR
COURT COMES IN TO REALLY FIRE
YOU UP AT THE VERY END. UH SO
YOU KNOW, THERE ARE SO MANY
THINGS TO SAY. UM I YOU KNOW,
OBVIOUSLY, I WAS JUST ELECTED,
SO I WAS RUNNING IN AN ELECTION
TALKING TO A LOT OF VOTERS
DURING THESE TWO BIG SPIKES,
WHICH COINCIDENTALLY, WERE RIGHT
BEFORE THE PRIMARY AND RIGHT
BEFORE THE GENERAL AND IT LEAVES
A LOT TO BE QUESTIONED THEIR I
THINK AROUND COLLUSION. UM BUT
YOU KNOW, WE I HAD A FRIEND OF
MY DAUGHTER IN SCHOOL. HER MOM
WAS TELLING ME THAT IF SHE
DIDN'T WORK FROM HOME, SHE
COULDN'T AFFORD TO DRIVE TO
WORK. UM PEOPLE WERE HAVING TO
MAKE UNBELIEVABLE CHOICES AROUND
THE PRICES OF GAS DURING THIS
PAST YEAR, AND IT WAS CHOICES
AROUND WHETHER OR NOT THEY COULD
AFFORD MEDICATION. WHETHER OR
NOT THEY COULD GO TO THE DOCTOR.
WHETHER OR NOT THEY COULD PAY
RENT, WHETHER OR NOT THEY COULD
PUT FOOD ON THE TABLE FOR THEIR
FAMILIES. AND MEANWHILE WE SEE
THAT EXECUTIVES ARE CASHING OUT
ON $500 MILLION AND STOCK. AND
THERE'S A 30. INCREASE COMPARED
TO OTHER STATES. IN PROFITS, AND
SO IT'S UM. YOU KNOW, TALKING
ABOUT WHETHER OR NOT THERE'S A
SMOKY BACK ROOM AND ALMOST FEELS
LIKE THE SYSTEM IS SET UP JUST
TO FUNCTION IN THIS FASHION.
IT'S NOT EVEN REALLY A LOT OF
SMOKY BACKROOM DEALS NECESSARILY
. IT'S JUST HOW THE SYSTEM WORKS
, AND THAT WE IN CALIFORNIA ARE
SYSTEMICALLY BEING GOUGED MORE
THAN ANYONE IN THE REST OF THE
NATION. UM SO YOU KNOW, I WANT
TO ASK A LITTLE BIT ABOUT THE
SUPPLY CHAIN DETAILS THAT HAVE
BEEN LAID OUT BEFORE US AND YOU
KNOW, AS AS HAS BEEN TALKED
ABOUT TODAY IF IT WAS A MATTER
OF INFLATION OR SUPPLY CHAIN
DISRUPTIONS, MARKET VOLATILITY,
SUMMER BLEND, YOU KNOW WHAT HAVE
YOU THAT COULD ALL BE ADJUSTED
WHILE NOT DRASTICALLY IMPACTING
THE PROFIT MARGIN, HOWEVER,
THAT'S NOT WHAT WE SAW. WE SAW
THAT BEFORE US WAS A NUMBER OF
EXCUSES OF WHY REFINERS WERE
ABLE TO RAKE IN PROFITS NEARLY
DOUBLE WHAT THEY MADE IN 2021
NOT GROSS INCOME, NOT 7. PROFIT
INCREASES TRACKING INFLATION BUT
100% INCREASE AND THE PER GALLON
PROFITS IN A YEAR AND 30% MORE
AS WE JUST TALKED ABOUT THAN
ANYWHERE ELSE IN THE U. S SO YOU
KNOW, PRESIDENT RAY HAS BUOYED
IF YOU CAN EXPLAIN THE PROFIT
JUMP. FOR YOUR MEMBERS AND
WHISPER. WHAT IS THIS? BASED ON?
THANK YOU VERY MUCH FOR THE
QUESTION AND THANK YOU FOR YOUR
CONCERN. I UNDERSTAND.
ESPECIALLY BEING NEWLY ELECTED.
WHAT WHAT YOU HAVE TO DEAL WITH
AND IN ANSWERING QUESTIONS FOR
YOUR CONSTITUENCY, SO I
APPRECIATE THAT VERY MUCH. THERE
IS NO SMOKING, BACKROOM. LET'S
GO BACK TO WHAT? WHAT IS THE
SITUATION WE FIND OURSELVES IN
TODAY? AND HOW HAS IT BEEN
CREATED? THIS IS AN EXTREMELY
TIGHT MARKET. WE ARE ALREADY
DOWN A HALF OF A REFINERY. WE
WILL BE DOWN A FULL REFINERY BY
THE END OF THE YEAR. WHY BECAUSE
TO REFINERS DID WHAT YOU ASKED
WAS TO CONVERT TO REFINERIES TO
RENEWABLE DIESEL. WHICH IS
OCCURRING. THIS IS A GOOD THING
, BUT IT ALSO LIMITS THE
CAPACITY OF GASOLINE AND A TIGHT
MARKET. SO IF WE ALSO HAVE TO
UNDERSTAND THERE ARE NO AND I
KNOW THIS IS GETTING A LITTLE
DEEPER THAN PERHAPS YOU WANT,
BUT THERE ARE NO CRUDE OIL
PIPELINES THAT BRING CRUDE OIL
HERE TO MAKE GASOLINE, DIESEL
AND JET FUEL. AND THERE ARE NO
PIPELINES THAT BRING CRUDE
PRODUCT HERE SO YOU CAN'T HAVE A
PIPELINE SHIPPING MORE GASOLINE
, DIESEL AND JET FUEL. YOU HAVE
WHAT YOU HAVE, OR IT'S COMING BY
A SHIP FROM FOREIGN PLACES THAT
WE PARTICULARLY DON'T SHARE OUR
VALUES, AND PARTICULARLY DON'T
HAVE THE ENVIRONMENTAL STANDARDS
THAT WE BENEFIT FROM IN REFINING
THOSE SAME PRODUCTS HERE IN THE
STATE OF CALIFORNIA. SO. TO
REALLY ADDRESS THIS ISSUE TO
REALLY GET OUT WHAT YOU'RE
POINTING TO, WHICH IS THE
PUBLIC'S CONCERN ABOUT WHAT THEY
PAY AT THE PUMP. WE HAVE GOT TO
DO WHAT THE ENERGY COMMISSION
HAS BEEN SAYING SINCE YEAR, 2000
WE HAVE GOT TO FIND A WAY TO
INCREASE CAPACITY IF YOU HAVE
MORE SUPPLY. YOU HAVE LESS COST.
IT'S THAT SIMPLE. AND SO WE HAVE
GOT TO MAKE SURE THIS BILL AND I
MEAN, I SEE SOME EVIDENCE OF THE
BILL WILL LOOK LOOK AT THESE
ISSUES. I WANT TO SEE A LOT MORE
FROM THE ENERGY COMMISSION. BUT
THESE ARE THE TYPES OF ISSUES WE
HAVE TO LOOK AT. IF WE'RE GOING
TO CHANGE THIS DYNAMIC AT ALL.
THIS REFINERY MARK THIS THIS TAX
PENALTY OR TAX OR PENALTY OR
REFINERY MARGIN. GROSS. YOU
KNOW, WHATEVER YOU WANNA CALL
IT. IT IS NOT GOING TO SOLVE
THIS PROBLEM. YOU'VE HEARD THIS
FROM SEVERAL BORNSTEIN. YES HE
TALKS ABOUT A MYSTERY SURCHARGE.
I TELL YOU RIGHT NOW, AND I
AGREE WITH JOHN. THERE'S NO
MYSTERY. NONE OF THIS COST WE'VE
BEEN TALKING ABOUT WHICH A
DOLLAR 20 OF IT, NOT 60 CENTS. I
DON'T KNOW WHERE SIXTIES A
DOLLAR 20 OF IT IS VERY DEFINED
. NABLE I'M SURE YOU'VE ALL SEEN
OUR GAS PUMP THAT HASN'T
CHANGED. AND SO IF I COULD,
HOWEVER WHAT HAS CHANGED IF I IF
I COULD JUST ASK, BECAUSE YOU
YOU JUST SAID THAT, YOU KNOW.
THERE'S ALL THESE OTHER REASONS
THAT THIS IS HAPPENING, RIGHT
FINERY IS CHANGING ALL OF THAT.
BUT HOW THEN WHY WAS THIS HUGE
DROP HAPPENED WHEN THE GOVERNOR
ANNOUNCES HIS PENALTY BECAUSE
NOTHING HAPPENED. NOTHING
CHANGED FROM BEFORE THAT
ANNOUNCEMENT AFTER THAT
ANNOUNCEMENT IN TERMS OF THE
CONDITIONS RIGHT FOR PRICES
THERE IS NO THERE WAS. THERE WAS
NO RELATIONSHIP TO THE
GOVERNOR'S ACTION, OR OR
ANNOUNCEMENT OR ANYTHING THAT
HAS TO DO WITH SUPPLY AND DEMAND
. AND WHAT DO YOU HAVE TO SAY
ABOUT, UM PRICES ALSO RISING
RIGHT BEFORE THE TWO ELECTIONS
LAST YEAR. THERE'S A THE SAME
THING AND I APOLOGIZE. WITH ALL
DUE RESPECT, THERE'S NO
RELATIONSHIP TO THE FACT THAT
THERE WERE TWO ELECTIONS AND
WHAT WAS HAPPENING IN THE
MARKETPLACE. CERTAINLY
GEOPOLITICS HAVE A HAVE
CERTAINLY. UM DECISIONS THAT ARE
MADE BY OPEC. THIS IS A GLOBAL
MARKET. THIS IS A GLOBAL
COMMODITY, ANY KIND OF DECISION
ANY KIND OF SIGNAL TO THE MARKET
CAN ALWAYS HAVE AN IMPACT. AND
THE THERE'S CERTAINLY YOU KNOW,
OBVIOUSLY, WE DON'T NEED TO TALK
ABOUT IT HERE. BUT OBVIOUSLY THE
RUSSIAN INVASION OF UKRAINE HAD
A SERIOUS IMPACT ON THE MARKET.
THOSE BIG GEOPOLITICAL EVENTS
WILL ALWAYS HAVE A HAVE A, YOU
KNOW A DISRUPTION OF SUPPLY IN
THE MARKETPLACE. BUT WHAT I DO
WANT TO MAKE THE POINT THAT WHAT
IS NOT IN HERE AND I GUARANTEE
YOU WE WILL BE LOOKING AT THIS
IN DETAIL. AND I THINK EVEN IF
YOU ASK SEVEN BORNSTEIN, HE
WOULD AGREE ON THE MYSTERY
SURCHARGE. THERE ARE SO MANY
COSTS WE HAVE NOT EVEN THOUGHT
ABOUT IN THESE NUMBERS. I
TESTIFY AT THE BARRIER QUALITY
MINUTE MANAGEMENT DISTRICT ON
THE BILLIONS OF DOLLARS EVERY
SINGLE REGULATION AS SAME IN THE
SOUTH COAST AND AGAIN. I'M NOT
SAYING THEY'RE NOT MERITORIOUS,
BUT THEY'RE COSTLY. NONE OF THAT
IS ACCOUNTED FOR HERE. AND SO WE
ARE GOING TO BE LOOKING AT IN
DETAIL AND SUPPLYING THAT
INFORMATION, DO YOU? SO THAT AS
WE LOOK AT THIS DIFFERENTIAL
THAT EVERYONE IS CONCERNED ABOUT
IT IS EXPLAINABLE. OKAY THANK
YOU. AND JUST ONE OTHER QUESTION
. UM YOU KNOW, I REALLY
APPRECIATE THE WORK OF THE
COMMITTEE STAFF ON THIS ISSUE IN
THE BACKGROUND AND SPECIAL,
SPECIFICALLY THE DEEP DIVE INTO
THE SPOT MARKET AND THE
CONCERNING LACK OF TRANSPARENCY
THAT CALIFORNIA HAS AGAIN AND
AGAIN HAD TO PEEL LAYER LAYERS
BACK TO UNDERSTAND MORE ABOUT
THE VARIOUS TRENDS IN OIL AND
GAS IN IN THE AND IN THE
INDUSTRY AS A WHOLE IN OIL AND
GAS. IN YOUR OPINION
COMMISSIONER GUNDA AND PRESIDENT
COURT D DO THE UPDATED REPORTING
AND DATA DISCLOSURES REQUIRED IN
SBX ONE TO PROVIDE CONFIDENCE
THAT SHOULD AN OCCURRENCE
SIMILAR TO 2020 TO HAPPEN AGAIN
THAT WE WOULD BE ABLE TO QUICKLY
IDENTIFY WHETHER THE MARKET
MANIPULATION HAD OCCURRED. THANK
YOU FOR THE QUESTION, SO THERE'S
TWO ELEMENTS TO THIS. UM SO ONE
IS JUST A SEC. THE COMMISSION'S
WORK ON LOOKING AT THE LONG TERM
TRENDS AND THEN DOING SOME
ASSESSMENTS. AND THEN AS YOU
KIND OF ALLUDED TO, SO WE HAVE
THE INDEPENDENT ENTITY WITHIN
THE WITHIN THE COMMISSION WHO
WILL BE LOOKING AT THE DATA. SO
I THINK THE SHORT ANSWER WOULD
BE WE WILL BE IN A MUCH BETTER
SITUATION TO ANSWER THOSE
QUESTIONS. SO TODAY. I MEAN IN
LAST YEAR, A NUMBER OF OUR STAFF
WERE REGULARLY ASKED BY THE
LEGISLATURE, THE GOVERNOR'S
OFFICE AND THE PUBLIC ON WHAT
WAS GOING ON AND THE KIND OF
DATA WE HAD THE LACK OF
DISAGGREGATED INFORMATION EITHER
TEMPORALLY OR GEOGRAPHICALLY
REALLY LIMITS OUR ABILITY TO
ANSWER QUESTIONS. SO WHAT WE'RE
HOPING FOR IS THE LEVEL OF
INFORMATION THAT WE HAVE
PROVIDED. WILL DEFINITELY
ENHANCE OUR ABILITY TO ANSWER
THOSE QUESTIONS. SO I DON'T KNOW
IF THE AGENT'S OFFICE HAS
ANYTHING ELSE THEY MIGHT WANT TO
MENTION. YEAH THANK YOU FOR
THAT, IF I IF I CAN JUMP IN HERE
AND THEN HAND IT OVER TO MR
COURT TO RIGHT NOW, WHEN WE
LAUNCH AN INVESTIGATION. WE SEE
SOMETHING WEIRD GOING ON IN THE
MARKET. UM AND WE LAUNCHED AN
INVESTIGATION. IT IS A IT IS AS
AS IS THE CASE WITH LAW
ENFORCEMENT, A LABORIOUS PROCESS
OF IDENTIFYING THE VARIOUS
ENTITIES INVOLVED IDENTIFYING
THE TRANSACTIONS INVOLVED. RIGHT
NOW WE ARE IN A POSITION OF
NEEDING TO UNSCRAMBLE EGGS. AND
WE WILL BE IF THE GOVERNOR'S
PROPOSAL HERE IS ENACTED, WE
WILL BE IN A BETTER POSITION THE
NEXT TIME THAT WE SEE SOME
MARKET DISRUPTION TO MORE
SWIFTLY IDENTIFY. WHAT IS
HAPPENING RIGHT AND WHAT IS
HAPPENING ON A DAILY WEEKLY AND
MONTHLY BASIS AND BETWEEN THE
VARIOUS ENTITIES INVOLVED IN THE
MARKET AND AGAIN, YOU KNOW, AS I
AS I THINK I ADDRESSED THIS IS
THIS IS SOME PRETTY SOME OF THIS
INFORMATION IS REALLY QUITE
BASIC WHEN IT IS PROVIDED TO A
MARKET REGULATOR AT THE OUTSET.
AND IT IS PROVIDED BY THOSE
ENTITIES THAT HAVE THIS
INFORMATION VERY READILY
AVAILABLE, BUT IS INFORMATION
THAT IS VERY HARD TO RECONSTRUCT
AFTER THE FACT COMING IN, UH,
WITH WITHOUT THE BENEFIT OF THAT
SORT OF REPORTING STRUCTURE. LET
ME LET ME MAKE IT REAL FOR YOU.
HERE'S HOW GAS PRICES GO UP BY A
DOLLAR IN A WEEK. SOMEONE MAKES
A PURCHASE ON THE SPOT MARKET,
WHICH IS A MARKET THAT IS
CONTROLLED BY THE FIVE
REFINERIES AND SMALL NUMBER OF
TRADERS. I DON'T KNOW, MAYBE A
DOZEN TWO DOZEN MAYBE MORE.
SOMEONE MAKES A PURCHASE ON THE
SPOT MARKET. AND THE SPOT. IT'S
A VERY HIGH HIGH NUMBER. THAT
SPOT MARKET PURCHASED, THEN
DICTATES AS MR MCCULLOUGH SAID
EVERY RETAIL GAS STATION
CONTRACT EVERY RETAIL GAS
STATION PAYS MORE FOR GAS
BECAUSE OF THAT SPOT BY SPOT
MARKET PRICE, AND WE ALL PAY
MORE FOR GAS. SO THAT SPOT
MARKET PRICE THE LONGER IT STAYS
HIGH. THE MORE MONEY EVERYONE
MAKES, AND WE DON'T KNOW NOW WHO
BOUGHT WHO MADE THAT PURCHASE
FOR? FOR HOW MUCH OR IF, EVEN IF
IT WAS A REAL PURCHASE? AND
THAT'S BECAUSE THERE IS NO
LEDGER OF THAT INFORMATION
ANYWHERE. THIS BILL CREATES A
LEDGER, WHO BOUGHT WHO SOLD WHEN
AND THE REASON THAT'S IMPORTANT
GOES TO THE ATTORNEY GENERAL'S
TRADE OUR CASE BECAUSE THEY
CAUGHT TWO TRADERS MAKING A
PHONY TRANSACTIONS ON THE SPOT
MARKET, WHICH DROVE THE PRICE UP
NOW, MR MCCULLOCH ADDED
SOMETHING INTERESTING. THE SPOT
MARKET PRICE AND THIS IS ALL
REPORTED TO OPUS. THIS IS AN OIL
INFORMATION PRICE. UH NEWSLETTER
. THAT'S ALL IT IS. AND IF IT'S
SELF REPORTED, UH, YOU DON'T
HAVE TO REPORT IT UNDER THE
BILL, YOU WOULD HAVE TO REPORT
EVERY TRANSACTION MADE. SO NOW
IT'S SELF REPORTED. SO MAYBE
THERE WERE TRANSACTIONS, BUT
THEY WEREN'T REPORTED TO OPUS.
SO HE'S AS BOB SAID THERE WAS
ONE TRANSACT. THERE WAS ONE
TRANSACTION IN TWO WEEKS, WHICH
KEPT THE GAS PRICE HIGH. WE
DON'T KNOW WHO MADE IT. I DON'T
KNOW IF YOU KNOW WHO MADE IT.
YOU HAVE TO DO SUBPOENAS TO MAKE
IT OR NOW WE WILL KNOW WHO MADE
IT AND WE WILL KNOW WHY THEY
MADE IT AND WE'LL KNOW EVERYONE
WHO MADE EVERY TRANSACTION. IT'S
THAT BASIC INFORMATION. THIS
ISN'T BUREAUCRACY. THIS IS BASIC
OPERATIONS ON COMMODITIES
MARKETS. THEY GET ELECTRICITY
MARKET ACCOUNTS FOR EVERY
TRANSACTION IN THE SAME WAY, AND
THEY DID IT BECAUSE OF ENRON.
WELL, WE'RE GETTING ENRON IN
CALIFORNIA. THIS IS R N RUN ACT
FOR GASOLINE. THERE WAS ONE
THING THE GOVERNOR DID THAT WAS
HELPFUL. AND THAT WAS HE PUT A
WAIVER IN PLACE SO THAT WE COULD
BRING MORE SUPPLY TO MARKET BY
NOT HAVING TO PRODUCE MORE
COSTLY GASOLINE BECAUSE OF
ENVIRONMENTAL REGULATIONS. HE
ALLOWED US A WAIVER SO WE DIDN'T
HAVE TO DO THAT. HE BROUGHT MORE
SUPPLY TO MARKET AND THE PRICE
DECREASED. THANK YOU.
BAUER-KAHAN UM THANK YOU, ALL OF
YOU. THIS IS AN INCREDIBLE GROUP
OF FOLKS HERE TODAY TO HELP US
UNSCRAMBLE A LOT OF EGGS, AS
MISS BLOOM HAS SAID MANY TIMES,
UM SO I JUST WANTED TO FOLLOW UP
TO MISS SHABBOS POINTS. I DON'T
THINK ANYTHING THAT I'VE HEARD,
UM, FROM PRESIDENT BOYD REESE
EXPLAINS THIS RIGHT THIS CHART
THAT SHOWS THIS INCREDIBLE SPIKE
AS OPPOSED TO OTHER STATES IN
2022 WHEN NO REGULATIONS
CHANGED. NOTHING CHANGED ON THAT
TIME PERIOD. THAT WOULD HAVE
EXPLAINED THAT SPIKE AND SO I
THINK WHEN YOU LOOK, I'M A
FORMER REGULATORY LAWYER. I
UNDERSTAND THE COSTS. I WAS PART
OF THE COST. AND SO I'M NOT
SAYING THAT THOSE ARE
INEXPENSIVE THINGS, BUT THAT
DOESN'T EXPLAIN THESE CHARTS
RIGHT? IT EXPLAINS SOME OF THE
UNDERLYING COSTS, BUT NOT THE
CHANGES WE'RE SEEING IN THE
MARKETPLACE. AND SO I THINK
THAT'S REALLY IMPORTANT TO SAY.
THE OTHER THING I WANTED TO SAY
IS ONE OF THE THINGS THAT WAS
SAID WAS THAT NO ATTORNEY
GENERAL HAS FOUND EVIDENCE OF
PRICE MANIPULATION AND I THINK
WHAT WE'RE HEARING MISS BLOOM
S¼, WHICH SHE SAID SO ELOQUENTLY
WAS. THEY HAVEN'T FOUND IT
BECAUSE THEY DON'T HAVE THE
INFORMATION. AND SO MAYBE THERE
ISN'T ANY MAYBE THERE IS BUT WE
SHOULD KNOW. AND THE INFORMATION
IN THIS BILL WILL GIVE US THOSE
ANSWERS. AND AT THE END OF THE
DAY OF WHAT WE FIND IS THERE'S
NONE THAT SEEMS LIKE A GOOD
THING FOR YOUR INDUSTRY FOR US
FOR US TO SAY, OH, LOOK, THIS
ALL MAKES A TON OF SENSE. AND I
DON'T KNOW WHY ANYBODY WOULDN'T
WANT SUNSHINE ON THAT. AND I
ACTUALLY THINK THAT IF WE DO
WHAT IS IN THIS BILL FROM AN
INFORMATION GATHERING
PERSPECTIVE. MISS BLOOM WILL
HAVE LESS WORK TO DO BECAUSE
SUNSHINE TRULY IS THE BEST
DISINFECTANT IF THAT MARKET IS
TRANSPARENT, PEOPLE WILL NOT
MANIPULATED BECAUSE SHE WILL
COME AFTER YOU. BUT RIGHT NOW,
PEOPLE CAN MANIPULATE IT WITHOUT
ANY KNOWLEDGE AND WITHOUT ANYONE
COMING AFTER YOU, AND THERE'S NO
QUESTION THAT THAT IS WORSE FOR
CALIFORNIA AND WORSE FOR
CALIFORNIANS. UM AND SO KNOWING
WHAT THOSE COST DRIVERS ARE, AND
MAYBE IT IS JUST PURELY SIMPLE
AS SUPPLY AND DEMAND, ALTHOUGH I
WILL POINT OUT THAT WE EXPORT
OIL RIGHT NOW WE EXPORT GAS AT
MORE THAN 10. AS I UNDERSTAND,
SO TO SAY, WE DON'T HAVE ENOUGH
SUPPLY IN CALIFORNIA FEELS A
LITTLE BIT DISINGENUOUS
CORRECTION TO THAT WE DO EXPORT
GAS TO THE STATE OF ARIZONA AND
NEVADA. AND I WOULD SAY IT WOULD
PROBABLY BE A FEW PHONE CALLS
MADE OF THAT STOPPED BY SOME
GOVERNORS AND SOME PEOPLE IN
THOSE STATES JUST LIKE GAS IS
EXPORTED OUT OF THE GULF OF
MEXICO TO OTHER STATES. THAT'S
WHAT WE EXPORT TO SUPPLY
AFFORDABLE FUEL TO THE CITIZENS
OF ARIZONA AND NEVADA WHO DO NOT
HAVE REFINERIES. UM WELL, THE
CHART SHOWS THERE'S MORE
AFFORDABLE, BUT, UM, SO THEY'RE
NOT SAYING OH, WE HAVE A HAND UP
FROM ONE OF OUR YOU KNOW HOW WE
WOULD HAVE DID? WHAT DO YOU WANT
ME TO FINISH? MR CHAIR? OKAY
COMMENTS AND I DO HAVE
QUESTIONS. I DO HAVE QUESTIONS.
UM SO I DO THINK I MEAN TO SAY
THAT THERE WASN'T ENOUGH SUPPLY.
I STILL FIND DISINGENUOUS. WE'RE
EXPORTING OIL, AND THAT IS MY
POINT TO MAKE. UM BUT I THINK
THAT THERE IS A LOT IN THE
INFORMATION GATHERING PART OF
THIS BILL THAT IS REALLY,
REALLY, REALLY BENEFICIAL. AND I
THINK WILL HELP CALIFORNIANS
KNOW FOR SURE WHAT'S HAPPENING
AND EXPLAIN THESE SPIKES AND
GIVE US THE INFORMATION WE NEED
AND AGAIN AS A FORMER
ENVIRONMENTAL REGULATORY LAWYER.
I HATE RED TAPE. I USED TO HAVE
TO BE THE PERSON WHO DEALT WITH
THE RED TAPE. I THINK WE SHOULD
BE CAREFUL ABOUT IT. BUT I ALSO
THINK AFTER YEARS AND YEARS OF
CALIFORNIANS PAYING MORE THAN
EVERY OTHER STATE, IT'S TIME FOR
US TO PUT A LITTLE BIT OF
PROCESS INTO PLACE TO UNDERSTAND
THAT BECAUSE MR BORNSTEIN WHO IS
A CONSTITUENT OF MINE, SO WE MET
EVEN BEFORE I WAS ELECTED, HAS
BEEN TALKING TO ME ABOUT THIS
MYSTERY FOR A LONG TIME. AND I'D
LIKE TO GET HIM AN ANSWER
BECAUSE I THINK CALIFORNIANS
DESERVE AN ANSWER. UM SO I JUST
WANTED TO MAKE THOSE POINTS, BUT
I HAVE A LOT OF QUESTIONS AS
WELL. SO LET'S GO THERE. MR
LAWRENCE, YOU ACTUALLY WANTED TO
SAY IS HE STILL ON YOU SHOULD
BE, YEAH. YEP I'M HERE. PERFECT
SO I HAD A QUESTION FOR YOU. I
ACTUALLY FIRST OF ALL I WANT TO
SAY I REALLY LIKED YOUR, UM,
COMMENTS REGARDING THE EXPERT
COMMITTEES. UM, I THINK THAT I
JUST WANT TO REITERATE THAT I
HOPE THAT'S SOMETHING THAT WE DO
LOOK AT REALLY SERIOUSLY BECAUSE
I THINK THERE IS A LOT OF
EXPERTISE IN CALIFORNIA THAT WE
COULD BRING TO BEAR TO BETTER
USE THIS INFORMATION IN THE
ABSENCE OF THAT. WHAT I WANTED
TO UNDERSTAND FROM YOU IS UM,
ONE OF THE OTHER THINGS IN THE
BILL THAT I THINK WAS
MISREPRESENTED HERE TODAY IS
THAT THERE ARE GREAT LENGTHS IN
THIS BILL. UM REGARDING
PROTECTING TRADE SECRET
PROTECTING CONFIDENTIAL
INFORMATION, AND I DO ACTUALLY
BELIEVE THAT THAT WILL BE
PROTECTED EVEN WITH THESE
DISCLOSURES, SO MY CONCERN IS
ACTUALLY THAT IF WE DON'T HAVE
THAT EXPERT PANEL, YOU TALKED
ABOUT THAT THOSE WHO ARE NOT A
PART OF THE C E C PROCESS, AS
DESCRIBED IN THE BILL WON'T HAVE
ENOUGH INFORMATION LIKE YOU AS A
PROFESSOR MAY NOT BE ABLE TO
MAKE THE ANALYSIS YOU NEED TO
MAKE AS AN ECONOMIST TO ADVISE.
THE PRESS OR WHOEVER ABOUT
WHAT'S HAPPENING AND I WANTED TO
YOU TO SHINE A LITTLE BIT OF
LIGHT ON IF YOU'RE NOT A PART OF
THIS PROCESS, WHAT INFORMATION
WHEN YOU HAD AND HOW HELPFUL
THAT WOULD BE TO US? I'M NOT.
ARE YOU ASKING? WOULD I BE ABLE
TO DO MUCH ANALYSIS IF I DIDN'T
HAVE ACCESS TO THAT INFORMATION
? SOME OF THE INFORMATION IS
PUBLICLY AVAILABLE, BUT IT SEEMS
LIKE IT'S ANONYMOUS SIZED SO BUT
NO, BASICALLY, UM, I THINK I
HAVE TO START BY REPEATING ONCE
AGAIN, MOST OF THE MYSTERY
GASOLINE SURCHARGES DOWNSTREAM
FROM THE REFINERIES, SO WE NEED
TO UNDERSTAND WHAT THOSE
RELATIONSHIPS ARE BETWEEN
REFINERIES AND THE DOWNSTREAM
THAT REQUIRES UNDERSTANDING WHAT
THOSE CONTRACTS ARE. AND
ALTHOUGH MISS REHABS BOY SAID,
WELL, THAT'S HUNDREDS OF
THOUSANDS OF CONTRACT OF
TRANSACTIONS IT IS AND EVERY ONE
OF THEM IS RECORDED. THESE
COMPANIES ARE NOT DOING THIS ON
A CASH IN THE HAND BASIS. THIS
IS ALL RECORDED SO TURNING OVER
THAT INFORMATION IS REALLY NOT
GOING TO BE VERY ONEROUS. IT'S
ALL ON COMPUTERS. IT CAN ALL BE
MADE AVAILABLE, UH, IT WILL BE
CHALLENGING TO EVALUATE IT ALL.
UM IF YOU DON'T HAVE THAT
INFORMATION, YOU'RE BACK TO
WHERE I WAS AS CHAIR OF THE
PETROLEUM MARKET ADVISORY
COMMITTEE WITH MY COLLEAGUES ON
THE P MAC. WHICH IS YOU'RE
LOOKING AT PRICES, BUT YOU HAVE
NO OTHER INFORMATION ABOUT
WHAT'S GOING ON BEHIND THOSE
PRICES, RETAIL PRICES AND I
DON'T THINK YOU CAN MAKE MUCH
PROGRESS AT ALL. AND SO I THINK
, UH, WE NEED TO HAVE A PANEL OF
REALLY, UH, SEASONED EXPERTS AT
AND FROM THE LEGAL AND ECONOMIC
AND INDUSTRY SIDE WHO CAN ADVISE
, UH, THIS DIVISION OF THE C C.
I DON'T THINK YOU THAT WAS
HELPFUL. UM AND THEN I WANTED TO
TOUCH ON ONE OTHER ISSUE. UM
FIRST OF ALL, I WANT TO SAY THAT
ONE OTHER THING THAT WAS SAID,
UM, WAS THAT THIS COULD DRIVE
PRICES UP AND ONE OF THE BEST I
THOUGHT ADDITIONS TO THIS
PROPOSAL WERE THE PIECES THAT
SAY THAT THERE WILL BE NO, UM
WE'RE FIGHTING MARGIN FAM WITH
YOU, MISS REYES BOYD, WHATEVER
IT'S CALLED, UM, UNLESS THE CDC
FINDS THAT PRICES WILL NOT GO UP
, SO THIS WILL NOT RESULT IN
PRICE IS GOING UP BECAUSE THAT
FINDING WILL HAVE TO PROCEED ANY
, UM, FEE WHATEVER THE FEES
CALLED, UM OKAY. ONE QUESTION I
REALLY HAD IN THIS WAS RELATED
TO THE PEOPLE OF CALIFORNIA. SO
I THINK A LOT IS GOOD HERE
RELATED TO THE ECONOMICS AND
ETCETERA, BUT I THEY WANT US TO
MAKE SURE AND I KNOW WE PUT
ENVIRONMENTAL JUSTICE INTO THAT
PANEL, THE ADVISORY PANEL THAT
EXISTS IN THE BILL, BUT IT'S
REALLY IMPORTANT TO ME THAT THE
COMMUNITIES THAT LIVE AROUND
THESE REFINERIES ARE PART OF
THIS CONSIDERATION THAT WHAT
HAPPENS TO THOSE COMMUNITIES AS
IT RELATES TO AIR QUALITY IS
REALLY, REALLY IMPORTANT. AND I
KNOW, UM AS I REPRESENT A
COMMUNITY THAT ISN'T FAR FROM
MANY OF THEIR FINERY. Z'S IN
NORTHERN CALIFORNIA AND UM,
THOSE PEOPLE THAT LIVE ON THE
FENCE LINE OR THE ONES THAT ARE
HEAVILY IMPACTED AND A LOT OF
THE MAINTENANCE THAT HAS
HAPPENED OVER THE YEARS THERE
HAS IMPROVED AIR QUALITY AS THE
REFINERIES IMPROVED TECHNOLOGY,
THEY TEND TO BE BETTER AND WE
SEE LESS, UM, EMISSIONS COMING
OUT. IN THE NEIGHBORING
COMMUNITIES, AND SO I WAS
SLIGHTLY CONCERNED AROUND THE
MAINTENANCE PIECE OF THIS AND
ENSURING THAT THE MAINTENANCE
THAT NEEDS TO HAPPEN HAPPENS FOR
THOSE COMMUNITIES THAT'S REALLY
, REALLY CRITICAL. AND AS I READ
IT, IT IS JUST A NOTICE
REQUIREMENT. UM YOU KNOW, A YEAR
IN ADVANCE FOR PLANNED
MAINTENANCE AND NO NOTICE
REQUIREMENT UNTIL AFTER 48 HOURS
AFTER FOR EMERGENCY MAINTENANCE
AS I UNDERSTOOD IT BUT I WANTED
SOMEONE TO SORT OF HIGHLIGHT
THAT PIECE OF IT BECAUSE I THINK
IT'S REALLY IMPORTANT THAT WE
TALK ABOUT, UM THE MAINTENANCE
THAT HAPPENS AND HOW IT AFFECTS
THOSE COMMUNITIES. YES THANK YOU
. AS I REMEMBER ON THAT
QUESTION, JUST ON THE ON THE ON
THE BILL ITSELF, THE TWO
SPECIFIC THINGS ON THE
MAINTENANCE AS YOU MENTIONED,
IT'S IMPORTANT THAT WE DO THE
NECESSARY MAINTENANCE FOR
ENSURING THE SUPPLY AND THEN TO
SAFETY AND THREE THE WORKFORCE
WE HAVE BEEN SINCE LATE
SEPTEMBER LAST YEAR MEETING WITH
A MEMBER OF REFINERS AND TRYING
TO UNDERSTAND HOW THEY GO ABOUT
PLANNING THESE COMPLEX
MAINTENANCE ISSUES. AND I WILL,
YOU KNOW, AGREE WITH WITH WITH
KATHY HERE THAT SOME OF THESE
MAINTENANCE SCHEDULES ARE, YOU
KNOW, LONG TERM AND THINGS LIKE
THAT, AND WE NEED TO THINK
THROUGH HOW BEST TO WORK WITH
THE INDUSTRY AND THE WORKFORCE
TO MAKE SURE THAT THE LABOR AND
THE INDUSTRY TO MAKE SURE THAT
WE ARE NOT INADVERTENTLY
IMPACTING THE SUPPLY. BUT THERE
ARE OTHER THINGS YOU KNOW, FOR
EXAMPLE, LAST YEAR, UM WHEN THE
PRICE BAGS WERE REALLY HIGH
INVENTORIES WENT THE LOWEST EVER
IN CALIFORNIA. NOW WE WANT TO
UNDERSTAND WHAT CAUSED THAT AND
TO THE EXTENT THAT THERE ARE
DIFFERENT MAINTENANCE ISSUES
THAT DO NOT CAUSE SAFETY
IMPLICATIONS OR POTENTIALLY THE
EMPLOYMENT AND LABOR WORK TO BE
ABLE TO BE, UM SCHEDULING THOSE
IN THE IN THE TIMELY FASHION. WE
WOULD LIKE TO HAVE THOSE
CONVERSATIONS TO ENSURE IF
THERE'S AN OPPORTUNITY FOR
DIFFICULT, UM, WHILE ENSURING
SUPPLY SAFETY BUT ALSO THE
PRICES, SO THAT'S THAT'S 11
THING. I WOULD OFFER THE
COMMITTEE ONLY OTHER THING, I
WOULD ADD TO THAT IF I MAY, UM,
IS, UM WE DON'T HAVE A PROBLEM.
GIVING THE C E C INFORMATION ON
THE TIMING OF TURNAROUNDS. WE
DON'T HAVE A PROBLEM GIVING THEM
INFORMATION ON MAINTENANCE
INFORMATION. WHAT WE WOULD ASK
YOU TO CONSIDER IS TO NOT
PROVIDE THE AUTHORITY FOR THE C
E. C TO IMPOSE REQUIREMENTS
GOVERNING THE TIMING OF THE
TURNAROUNDS OR THE AUTHORITY TO
SCHEDULE THEM BECAUSE OF ALL OF
THE THINGS I WENT THROUGH
DOESN'T MEAN YOU CAN'T HAVE
CONVERSATIONS BUT THE AUTHORITY
TO GIVE THEM THE AUTHORITY FOR
THE DECISIONS THAT REFINERIES
THEMSELVES HAVE TO MAKE IS A
CONCERN WE HAVE IN THE BILL. I
SEE THE WONDER RESPONDED JUST TO
ADD TO KATHY HERE. JUST WANT TO
MAKE SURE THAT THE BILL READS
THAT THE CC IN IMPLEMENTING THIS
REGULATION HAS TO CONSULT WITH
THE INDUSTRY LABOR, SO THAT'S
SOMETHING WE WOULD TAKE INTO
ACCOUNT AND IN DEVELOPING THOSE
REGULATIONS AND SO THAT INDUSTRY
INPUT WILL BE A PART OF THAT.
THANK YOU. AND THEN THE LAST
QUESTION I HAVE IS ONE OF THE
REPORTS HERE IN SECTION 25355.7
. I DON'T HAVE MY READING
GLASSES, SO I THINK I GOT THAT
RIGHT REQUIRES AN ANNUAL REPORT
BACK TO THE LEGISLATURE ON A
REVIEW OF THE PRICE OF GASOLINE
AND ITS IMPACT ON STATE REVENUES
. AND MY QUESTION THERE IS
ACTUALLY VERY SIMILAR TO MY
QUESTION BEFORE IT DOESN'T
CONTEMPLATE TALKING TO US ABOUT
THE IMPACT ON CONSUMERS, RIGHT,
I GUESS THE PRICE OF GASOLINE
INEVITABLY AFFECTS CONSUMERS.
BUT IT'S TALKING ABOUT STATE
REVENUES MORE THAN THE IMPACT ON
COMMUNITIES AND OUR COMMUNITIES
WHO COMMUTE FOUR HOURS A DAY
BECAUSE THEIR JOBS ARE SO FAR
AND I JUST I REALLY WISH THAT
THAT CONTEMPLATED THE IMPACT ON
PEOPLE AND ON CALIFORNIANS
BECAUSE I THINK THAT'S A REALLY
IMPORTANT PIECE OF WHAT WE'RE
TRYING TO ACHIEVE HERE, AND THAT
REPORT DOES NOT SPECIFY THAT
SPECIFICALLY SO I JUST WANTED TO
HIGHLIGHT THAT. I DON'T KNOW IF
YOU WANT TO SAY ANYTHING IN
RESPONSE TO THAT, AND I WAS
JUST, YOU KNOW, CONTINUE TO WORK
WITH YOU ON THOSE ELEMENTS. I
THINK YOU ABSOLUTELY RIGHT. THIS
IS, UM YOU KNOW WHAT? WE ARE
HEARING FROM THE PANELISTS.
TODAY. WE ALL BRING DIFFERENT
PERSPECTIVES. THERE'S AN
INDUSTRY PERSPECTIVE. THERE'S AN
ACADEMIC PERSPECTIVE FROM THE
CCS PERSPECTIVE ARE SINGULAR,
SINGULAR ROLE IS RELIABLE,
AFFORDABLE AND EQUITABLE
TRANSITION OF ENERGY INDUSTRY SO
FROM FROM WHERE WE SIT ON THIS
IN A WEIRD LOOKING AT GATHERING
THE INFORMATION AND DOING
WHATEVER IS REQUIRED UNDER THIS
LAW AND THE BILL TO REALLY
PROTECT IN THE CALIFORNIAN, SO
YOUR POINT IS VERY WELL TAKEN.
THANK YOU. THANK YOU. AND SO
I'LL JUST CLOSE WITH SAYING THAT
THE, UM YOU KNOW, THE VOICE THAT
ISN'T AT THIS TABLE IS THE LABOR
WORKFORCE. I THINK THAT'S REALLY
IMPORTANT. I KNOW MANY OF THEM
HAVE COME OUT IN SUPPORT OF THIS
PROPOSAL. ALTHOUGH THERE WERE
COMMENTS MADE TO THE CONTRARY.
AND UM YOU KNOW THAT IS ANOTHER.
AND I REALLY DO APPRECIATE THE
TRANSITION PLAN HERE BECAUSE I
THINK IT'S IMPORTANT. IT
HIGHLIGHTS THE NEED TO FOCUS ON
THE LABOR WORKFORCE. UM THAT'S
IMPACTED BY THAT, AND HOPEFULLY
THAT WILL PUT CALIFORNIA IN THE
DIRECTION WE NEED TO GO IN. AND
LASTLY, I WANT TO THANK THE
CHAIR WHO PUT TOGETHER A REALLY
WONDERFUL HEARING. THANK YOU, MR
CHAIR. THANK YOU. I BEFORE WE GO
ON TO MORE QUESTIONS. I KNOW MR
ROBERT MCCULLOCH HAD HIS HAND
UP, SO I WANT TO GIVE HIM AN
OPPORTUNITY TO A IN ON THE
COMMENTS AND, UH QUESTIONS OR
WERE JUST ASKED AND ANSWERED.
THAT'S VERY KIND AND I APOLOGIZE
IF RAISING MY HAND WAS LAST
APPROPRIATE THAN IT WAS WHEN I
WAS A SCHOOL TRAVEL. I JUST
WANTED TO NOTE THAT DISCUSSION
ABOUT EXPORTING THE NEIGHBORING
STATES. REALLY IS MUCH LESS
IMPORTANT MARKET IN CALIFORNIA
THAN THE EXPORTS TO MEXICO AND
SOUTH AMERICA. IT IS NOT ONLY A
US ISSUE. AND SO WHEN PRICES GO
UP HERE, AND THEY ALSO GO UP IN
FOREIGN COUNTRIES. AND WE
FOLLOWED THAT VERY CAREFULLY
OVER THE YEARS. WELL, THANK YOU
. AND I GUESS IT GOES TO SHOW
THAT THOSE SKILL SETS THAT WE
LEARNED KINDERGARTEN TO, UH, TO
WORK ALL THE WAY THROUGH. UH OUR
LIFE SPECS CHAIRMAN. ANY OTHER
QUESTIONS, MR KING? UH THANK
YOU, MR CHAIR. I JUST WANTED TO
GO BACK TO, UH, MISTRESS BOYD.
UM I THINK MY COLLEAGUE FROM LOS
ANGELES HAD A QUESTION ABOUT
PROFIT. AND I THINK YOU ANSWERED
HER ABOUT COST. SO COULD YOU
ILLUMINATE? WHY MANY OF THE
REFINERIES MANY OF THE COMPANIES
END UP EARNING GREATER PROFIT IN
CALIFORNIA VERSUS OTHER PARTS OF
THE COUNTRY? CAN I ALSO
ILLUMINATE ON THE FACT THAT
THERE IS NO ONE IN THIS HEARING
OR THE PREVIOUS SENATE HEARINGS
WHO HAVE LOOKED AT THE PERIODS
OF TIME WHEN THIS INDUSTRY HAS
LOST MILLIONS, IF NOT BILLIONS
OF DOLLARS DURING THE PANDEMIC
OVER A LONGER PERIOD OF TIME?
IT'S QUITE CONVENIENT TO PICK
ONE SNAP. SHOT AND HAVE A ENTIRE
CONVERSATION AROUND IT. SO IT'S
A CYCLING INDUSTRY. AND IT GOES
UP. IT GOES DOWN AND INDUSTRIES
LIKE MANY HAVE GOT TO MAKE THOSE
DECISIONS BASED ON THE LONG TERM
PLANNING OF BEING ABLE TO BE
PROFITABLE AS AN ENTITY, THE
OTHER CHART. I WISH I HAD
BROUGHT HINDSIGHT IS ALWAYS IS
ALWAYS GREAT. UM IS THE
INFORMATION THAT'S BEEN PUT OUT
BY BOTH THE INDUSTRY, UH, WITH
BOTH THE ENTITIES THAT LOOK AT
FORECASTING IN THE FEDERAL
GOVERNMENT THAT SHOWS THIS
INDUSTRY'S RATE OF RETURN IS FAR
BELOW THE MAJORITY OF S AND P
500 RATE AND RETURNS. AND YET
THERE'S NO CONVERSATION ABOUT
THAT. WOULD YOU LIKE TO ANSWER
MY QUESTION? THE QUESTION IS WHY
THERE APPEARS TO BE A HIGHER
PROFIT PER GALLON IN CALIFORNIA
THAN OTHER PARTS OF THE COUNTRY
. I THINK WE TALKED ABOUT THE
MAJORITY OF THAT BEING A DOLLAR
28 OF TAXES FEES WERE TALKING
ABOUT TRADE PROFIT PROFIT PROFIT
IS ABOVE TAXES, FEES COST YOU
TALKED ABOUT COST YOU DON'T TALK
ABOUT PROFIT. WHY IS THE PROBLEM
ABOUT GROSS PROFIT WITHOUT
TAKING INTO A PACKED INTO EFFECT
COST? JUST YOU HAVE TO DEAL WITH
HIM. IF THAT'S THE CASE, BUT YOU
HAVE TO DEAL WITH BOTH THE COST
IMPLICATIONS. ALSO THE COST
PIECE OF THAT RIGHT. IT'S NOT
JUST THE GROSS MARGINS. IT'S NOT
JUST THE GROSS PROFIT. IT IS THE
NET. DEALING WITH THE COST OF
WHAT IT TAKES TO GO BACK IN
THOSE INVESTMENTS. THAT'S RIGHT
OF RETURN. THAT'S WHAT IS LOOKED
AT. WHEN YOU LOOK AT EARNINGS
PROFIT IS WHAT YOU EARN
NEGATIVE. COSTS AND TAXES.
THAT'S THE DEFINITION. THAT'S
WHY YOU SEE TWO DEFINITIONS OF A
GROSS REFINING MARGIN AND A NET
REFINING ONE HAS COST AND THAT
TAKE INTO INPUT AND ONE THAT
DOES NOT. WHY IS THE PROFIT
HIGHER IN CALIFORNIA? THE COST
OF DOING BUSINESS IS HIGHER IN
CALIFORNIA, SO BECAUSE THE COST
OF DOING BUSINESS IS HIGHER THAN
YOU WANT TO MAKE A HIGHER PROFIT
, IT'S SUPPLY AND DEMAND. IT IS
ALL INCORPORATED INTO WHAT IT
TAKES TO DO BUSINESS HERE WHAT
IT TAKES TO SELL YOUR PRODUCT
WHAT IT TAKES TO MAKE YOUR
PRODUCT AND HOW IT'S INFLUENCED
BY A GLOBAL MARKETPLACE. WHY IS
THE PROFIT HIGHER? HERO. I'M I'M
SORRY. ASSEMBLYMEMBER'S YOU
DON'T LIKE MY ANSWER, BUT IT'S
THE SAME ONE. I JUST GET AN
ANSWER. I DIDN'T GET AN ANSWER.
WHAT I GOT WAS A LOT OF
GENERALITY. I DIDN'T GET AN
ANSWER. I DIDN'T GET AN ANSWER
THAT YOU COULD TELL STANDARD AND
POOR'S. I CONTINUE TO TRY TO
EXPLAIN THE DIFFERENCE BETWEEN
THE MARKET IN CALIFORNIA, WHICH
IS AN EXTREMELY TIGHT MARKET. WE
DON'T HAVE ENOUGH REFINING
CAPACITY TO MEET DEMAND. WE ONLY
PRODUCE 1.8 MILLION BARRELS A
DAY AND WE NEED WE ONLY PRODUCED
1.4 MILLION BARRELS A DAY. WE
NEED 1.8 MILLION BARRELS A DAY,
SO IT IS ALL BASED ON SUPPLY
DEMAND. AND WHAT IT TAKES TO DO
BUSINESS, AND PROFESSOR
BERNSTEIN WOULD TELL YOU THAT
EXPLAINS WHY YOUR COST IS
HIGHER. WHAT IS YOUR PROFIT
HIGHER? I'VE EXPLAINED IT. I'M A
I APOLOGIZE. YOU DON'T LIKE MY
EXPLANATION. IT'S NOT AN
INFLAMMATION. SO, UH, MR VIEW IT
IS. IT'S NOT AN EXPLANATION THAT
YOU COULD TELL YOUR REGULATORS
MR COURT YOU WANTED TO SAY WHY
YOU WANT TO GIVE ANY SUPPOSITION
AS TO WHY IN YOUR CHART. WELL
LOOK, WE COMPARED THE GROSS
REFINING MARGIN HERE AND
ELSEWHERE. THE GROCERY FINDING
MARGIN IS THE DIFFERENCE BETWEEN
PETROLEUM THAT COMES OUT OF THE
REFINERY AND THE CRUDE THAT GOES
INTO IT, EXCLUDING TAXES,
ENVIRONMENTAL COSTS ANY OF THAT
, AND I THINK THE REASON THEY
CHARGE US MORE HERE IS BECAUSE
THEY CAN BECAUSE THEY HAVE A
CONSOLIDATED MARKET. BECAUSE
THEY THEY HAVE THE ABILITY TO DO
IT THROUGH, UH, A SPOT MARKET
THAT ISN'T TRANSPARENT. THEY DO
IT BECAUSE THEY BELIEVE AND THIS
IS JUST MY BELIEF THAT THEY WANT
TO PUNISH US FOR OUR
ENVIRONMENTAL POLICIES AND SAY,
CALIFORNIA YOU WANTED TO GO
GREEN. YOU'RE GOING TO PAY MORE.
REGARDLESS THE NUMBERS ARE THE
NUMBERS. AND THAT'S WHY THE
PRICE GOUGING PENALTY TAKES CARE
OF THAT ISSUE, BECAUSE IF THEY
COME OUT ABOVE A CERTAIN LEVEL.
THERE'S APT AND THAT'S THE POINT
IS THE POINT IS IF WE IS THEY
WILL. THEY WILL TAKE AS MUCH AS
THEY CAN TAKE BECAUSE THEY
CONTROL THE MARKET. SO YOU'RE
TELLING ME THEY HAVE AN
OLIGOPOLY OLIGOPOLY BELIEVE THEY
HAVE A FEW PEOPLE WHO CAN
CONTROL THE MARKET SO THEY CAN
SET THE PRICE GENERALLY, IF YOU
HAVE AN OLIGOPOLY, OR YOU HAVE
IN THE MAP AND UP MONOPOLY LIKE
WE DO IN THE UTILITY INDUSTRY,
YOU HAVE REGULATION. AND YOU
ACTUALLY HAVE A CERTAIN LEVEL OF
THAT'S WHAT THIS PROPOSAL ISN'T
REACTION TO THAT IS THE
OLIGOPOLY GOT OUT OF HAND AND
WENT OVERBOARD LAST YEAR, AND
THIS PROPOSAL IS SAYING, YEAH,
WE GOT NO OLIGOPOLY, AND WE
GOTTA ANSWER IT. I'M JUST GONNA
ASK PROFESSOR BERNSTEIN JUST TO
SEE IF HE HAD A GUESS AS TO WHY
THE PROPHET AND AGAIN, NOT THE
COST, BUT WHY THE PROFIT IS
HIGHER. IN CALIFORNIA. WELL, I
THINK THAT THE PROPHET IS HIGHER
IN CALIFORNIA. I UM I SUSPECT IT
IS DUE TO LESS COMPETITION. I
DON'T HAVE ENOUGH INFORMATION TO
GIVE YOU THE DETAILS. WHAT I DO
KNOW IS THAT MOST OF THAT PROFIT
IS NOT BEING EARNED. IN THE
REFINERY PRICE. MOST OF IT IS
BEING EARNED THROUGH DOWNSTREAM
TRANSACTIONS, SO I THINK, AND
THAT MAKES IT MUCH MORE COMPLEX
. THERE ARE A LOT OF CONTRACTS
BETWEEN THOSE REFINERS AND THE
DOWNSTREAM FIRMS, AND SO WE
REALLY NEED TO STAY FOCUSED ON
WHERE THAT MONEY IS BEING EARNED
, AND IT'S GOING TO REQUIRE A
PRETTY DETAILED INVESTIGATION TO
REALLY UNDERSTAND. WHY THAT'S
HAPPENING NOW, THE OIL INDUSTRY
WILL SAY THERE'S A LOT MORE
REGULATION IN CALIFORNIA. UH AND
SOME OF IT MAY ACTUALLY BE
CONTRIBUTING TO HAVING LOST
COMPETITION. UH AND ALL OF THOSE
ARE POSSIBILITIES. UH BUT I
THINK THAT NONE OF US IN THIS
ROOM VIRTUALLY OR PHYSICALLY
REALLY KNOW THE ANSWER TO HOW
ALL OF THOSE CONTRIBUTE. AND
THAT'S WHY WE NEED AN ARM OF THE
CC THAT CAN REALLY DIG INTO THIS
HAVE THE RESOURCES AND HAVE THE
EXPERTISE TO DO SO. I JUST
WANTED TO MAKE 11 POINT THAT
BECAUSE SEVEN KEEPS SAYING THIS
, THAT IT'S MOST OUT MOSTLY
DOWNSTREAM, AND THAT MAY BE TRUE
IN 2015 AND 2022 THE NUMBERS FOR
THE C E C. THE NUMBERS
MCCULLOUGH CRUNCH AND THIS SEC
REPORTS ALL SHOW. A HUGE
INCREASE IN THE REFINING MARGIN,
NOT THE DOWNSTREAM MARGIN. AM I
CORRECT? I MEAN, YEAH, YOU'RE
YOU'RE NOT CORRECT. WELL I JUST
SAY, CAN I JUST SAY THAT THE
THERE ARE MANY ASKING YOU I WAS
ASKING TO SEE. SEE THIS WITH THE
SPOT PRICE. WHICH I AND I THINK
BOB IS RIGHT. THE SPOT PRICE IS
NOT A COMPLETELY LIQUID,
TRANSPARENT MARKET. YOU WILL
FIND THAT MOST OF THE DOWNSTREAM
PROFITS ACTUALLY BETWEEN THE
SPOT PRICE IN RETAIL. IF YOU DO
IT WITH RACK, WHICH IS A MUCH
MORE TRANSPARENT PRICE WITH THAT
IS POSTED AT ALL THE WRECKS. YOU
ALSO FIND THAT MOST OF THE
PROFITS ARE THAT'S NOT ACCURATE
, NOT DISPUTING THAT. THERE WERE
ALSO A LOT OF PROFITS UPSTREAM
IN 20, BUT I LOOKED. THE
REFINING MARGIN IS REPORTED. TO
THE SEC BY THE COMPANIES
SPECIFICALLY FOR THE WESTERN
REGION, THEN THE THEN THE C E C
. TAKES THE RACK PRICE SUBTRACTS
THE TAXES THE CARBON TAXES AND
THEN SUBTRACTS IT FROM THE
RETAIL PRICE AND THEY GET THE
REFINING MARGIN. THAT'S WHY
THESE ARE REFINING MARGINS.
THESE SPIKES IN HIS CHARTER
REFINING MARGINS, AREN'T THEY NO
. WELL THEY'RE NOT NOT HIS
CHARGE. THERE WAS A LARGE SPIKE
IN THE REFINING MARGIN, AND IT
WENT DOWN VERY QUICKLY AFTER
GOVERNOR NEWSOM DID THE WINTER
BLEND AND THEN THE RETAIL PRICE
, DAVE VERY HIGH. THE SPOT PRICE
WAS WAY DOWN BY THEN. AND THAT'S
THE GRAPHITE SHOWED SO THE AND
MOST OF THE MONEY THAT THE EXTRA
MONEY THAT'S NOT TO MINIMIZE THE
STUFF THAT WENT INTO THE
REFINING IT, BUT I DON'T THINK
THAT THIS IS A IT IS CALLED.
THANK YOU. YOU KNOW, I AM, UH,
JUST CHANNEL KINDERGARTEN. TWO
OF YOU WANT TO TAKE INTO A
CORNER AND HAVE A CONVERSATION
THAT BE GREAT. I REMEMBER
THINKING I KNOW THAT I WOULD
HAVE TO GO IN THE CORNER WITH
THEM. YES, WE CAN ALL GO TO THE
CORNER IN A SECOND COMMISSIONER
GUNDHA. IF HE COULD RESPOND, AND
THEN I WANTED TO HAVE SOME
FOLLOW UP QUESTIONS. YEAH, THANK
YOU, ASSEMBLYMEMBER'S AND I JUST
WANT TO MAKE SURE YOU KNOW THE
IMPORTANCE OF WHAT? UM, YOU
KNOW, PROFESSOR BERNSTEIN IS
TALKING ABOUT IN TERMS OF THE
MARGINS IN THE DEFINED IN THE
RETAIL, CONTRIBUTING TO THE
PRICE BIKES OVER TIME, AND I
THINK ONE OF THE TWO THINGS WE
INDICATED IN OUR PRESENTATION.
IT'S BOTH YOU HAVE TO LOOK AT
BOTH THE REFINERY MARGINS, WHICH
WERE EXTRAORDINARY LAST YEAR,
WHICH WAS A DIFFICULT, YOU KNOW
IT'S A RECORD BREAKING AND THE
DETAIL LEVEL IN WHICH WE HAVE
THIS DEALER, TANK WAGON
CONTRACTS AND SUCH THAT COULD BE
CAUSING ALSO PRICING. SO I THINK
IT'S BOTH OF THEM ARE IMPORTANT,
AND BOTH OF THEM NEED TO BE
STUDIED AND UNDERSTOOD. I WOULD
AGREE. THANK YOU. AND JUST
PUSHING MY COLLEAGUE FROM THE
EAST BAY TALKING ABOUT THE THREE
DIFFERENT PRICE SPIKES IN THE
LAST 10 YEARS. ACTUALLY, WE DO
KNOW ONE OF THE REASONS WHY ONE
OF THE PRICES SPIKED, AND THAT'S
BECAUSE A NUMBER OF REFINERIES
HAD TO SHUT DOWN BECAUSE OF THAT
SUPPLY WENT DOWN THAT THAT MAKES
ME COMPLETE SENSE. UM UH, ONE
THING I WOULD LOVE TO SORT OF
ASKED MISTRESS BOY, IT IS MY
UNDERSTANDING IS WHEN YOU ARE
DOING AND YOU HAD SORT OF
ALLUDED TO THIS. WHEN YOU'RE
DOING THESE PLANTS, I'M NOT
TALKING ABOUT UNPLANNED
SHUTDOWNS. TO ME. THOSE ARE
SOMETHING THAT CANNOT BE
CONTROLLED. AND WHEN YOU HAVE
HELPING SAFETY PLANS SEEM TO BE
SHUT DOWN AS QUICKLY AS POSSIBLE
TO DO WHATEVER MAINTENANCE SHE
NEEDS TO DO. I ABSOLUTELY
COMPLETELY UNDERSTAND AND
COMPLETELY AGREE WITH THAT. BUT
WHEN YOU HAVE THESE SCHEDULED
SHUTDOWNS, MY UNDERSTANDING IS
THESE ARE PRETTY PRETTY BIG
EVENTS. AND THEY ARE PLANNED
YEARS IN ADVANCE. RIGHT TURN
AROUND. BASICALLY THEY CAN'T
TURN AROUND. AND SO I GUESS THE
I THINK THE WAY I READ THE BILL
THAT I THINK THE UNDERSTANDING
OF WHAT THE BAD PART OF THE BILL
IS TRYING TO ACCOMPLISH IS THAT
YOU KNOW, I DON'T I DON'T KNOW
AGAIN HOW MUCH COMMUNICATION
HAPPENS BETWEEN THE DIFFERENT
REFINERIES AND COORDINATION. MY
UNDERSTANDING IS THERE'S ONLY
LIMITED AMOUNTS OF TIME SPRING
FALL THAT YOU REALLY TRY TO DO
YOUR TURNAROUNDS. UM BUT THAT IF
THERE IS, UM, INADVERTENT
SCHEDULING AT THE SAME TIME, I
THINK THE POINT OF THE WAY THE
BILL IS TOO UH, HAVE A
DISCUSSION WITH YOU TO WORK WITH
THE INDUSTRY TO NOT HAVE IT
OVERLAPS SO THAT IT'S NOT TRYING
TO, UM GET IN YOUR WAY OF DOING
THE TURNAROUND, BUT JUST MAKING
SURE THAT IT'S NOT HAPPEN AT THE
SAME TIME, SO THAT THERE'S NOT A
SUPPLY ISSUE. YES PLEASE. YES
THAT IS VERY CORRECT. AND WHAT I
WOULD SAY TO THAT IS THAT A LOT
OF THAT GOES ON NOW. AND I THINK
AS COMMISSIONER BUNDA WOULD
REPORT IT'S NOT FORMALIZED WITH
THE ENERGY IS FORMALIZED WITH
OTHER AGENCIES, BUT NOT THE
ENERGY COMMISSION. BUT THOSE
CONVERSATIONS DO OCCUR. WE DO
GET CALLS FROM THE ENERGY
COMMISSION. OUR MEMBERS DO ON
REFINERY TURNAROUNDS TO MAKE
SURE WHICH IS WHY YOU HAVEN'T
SEEN ANY PROBLEMS RELATIVE TO
THEM BEING SCHEDULED, YOU KNOW
WHERE THERE WOULD BE A SUPPLY
DISRUPTION. AND SO THAT GOES ON
NOW THIS FORMALIZES IT AND
AGAIN, WE HAVE NO PROBLEMS
SUBMITTING THE INFORMATION. WE
HAVE NO PROBLEM HAVING
CONVERSATIONS ABOUT IT. WE DO
HAVE ISSUES WITH AN A AN OUTSIDE
ENTITY BEING ABLE TO DICTATE
WHAT THOSE SPECIFIC TIME FRAMES
ARE. AND I TOTALLY UNDERSTAND
THAT I THINK THAT I THINK THE
CHALLENGE IS IF YOU HAD LET'S
SAY TWO OR FINERY, XYZ AND THEY
WERE JUST DEAD SET ON. DOING
REPAIRS. AND I DON'T KNOW. DO
THEY LAST DID THE LAST FOR A
WEEK OR THE LAST FEW DAYS.
ROUGHLY. DO YOU KNOW OR THEY
COULD THEY CAN DEFINITELY BE A
PERIOD OF TIME, RIGHT? SO SO
LET'S JUST SAY, FOR WHATEVER
REASON, THEY'RE JUST ADAMANT.
THEY BOTH HAVE TO HAPPEN ON
SEPTEMBER 15TH. UM I GUESS THE
ISSUE IS THE ENERGY COMMISSION
WOULD HAVE ABSOLUTELY NO ABILITY
TO BE LIKE, HEY, CAN SOMEBODY
MOVED TO SEPTEMBER 1ST OR
SOMEONE MOVED TO SEPTEMBER? 30 I
DON'T THINK THE ENERGY
COMMISSION IS TRYING TO SAY,
HEY, YOU'RE GOING TO CANCEL
THIS. IT'S JUST MAKING SURE THAT
WE'RE COORDINATING TO, UM TO NOT
OVERLAP AND TO MAKE SURE THAT
WE'RE HAVING THAT PROPER
COORDINATION. I DON'T THINK
ANYBODY IS TRYING TO STOP YOU
FROM DOING IT OR TO STOP YOU
FROM DOING IT THE WAY YOU WANT
TO DO IT. I THINK IT'S JUST
MAKING SURE THAT THERE'S THAT
COORDINATION AND AGAIN WE THAT
HAPPENS NOW THAT ACTUALLY
HAPPENS NOW, AND THAT'S WHY
THERE HASN'T BEEN ISSUES AND SO
I DON'T SEE THE NEED TO HAVE THE
MORE ENFORCEMENT SORT OF
EXERTION. ON FORCING THAT
BECAUSE I THINK THAT HAPPENS NOW
, AND THOSE CONVERSATIONS OCCUR
AND AGAIN WE HAVE NO PROBLEM
FORMALIZING THE REPORTING. UM
BUT WE DO HAVE A PROBLEM WITH
TURNING OVER THAT RESPONSIBILITY
, WHICH IS THE REFINERS
RESPONSIBILITY. IT IS THEIR JOB
TO ENSURE SAFETY OF THEIR
FACILITY TO THE EMPLOYEES THAT
WORK THERE IN THE COMMUNITIES
AND I KNOW THE ENERGY
COMMISSION. IT IS TAKING THAT
INTO ACCOUNT. I'M NOT SAYING
THAT'S NOT THE CASE, BUT THAT IS
HAPPENING AS WE SPEAK, SO WE
DON'T SEE THEM AND I DON'T AND I
DON'T FORESEE THAT IF THAT
CONTINUES TO HAPPEN, AND WE
DON'T HAVE WHAT HAPPENED BEFORE
WHERE WE HAD SORT OF UNEXPECTED
SHUTDOWNS BECAUSE OF MAINTENANCE
, AND I WOULDN'T FORESEE THEM,
FORCING ANYONE TO MOVE OFF THEIR
TIMELINE. I THINK THAT TIMELINE
WOULD STAY AS LONG AS THAT
COORDINATION OCCURS. AND AS LONG
AS, UM NO ONE IS STUBBORNLY
SAYING, HEY, YOU KNOW,
REGARDLESS OF STUFF, AND I'M NOT
SAYING THAT THIS WOULD HAPPEN
JUST SAYING IF THAT IS JUST IF
THAT SITUATION CURD THAT YOU
SAID HEY. WE HAVE TO DO IT THEN
AND OTHERWISE FORGET IT THAT
THAT'S WHEN I WOULD HAVE TO. I
WOULD FORESEE THEM POTENTIALLY
USING THAT. AUTHORITY TO
COORDINATE AND. I ENCOURAGE, YOU
KNOW, REALLY MOVE SOMEBODY OFF
THAT TIMELINE SO WE WOULDN'T
HAVE A SUPPLY ISSUE. REMEMBER
THESE REFINERIES ARE DOING ALL
OF THIS PLANNING FOR SAFETY
CONCERNS. SO IF SOMEBODY IS
MAKING A DECISION THAT IS
DIFFERENT THAN THE DECISION THAT
THEY MADE FOR THE REFINERY FOR
SAFETY CONCERNS, THAT'S A
CONCERN FOR US. BUT AGAIN, WE
HAVE NO PROBLEM WITH THOSE
CONVERSATIONS. WE HAVEN'T HAD A
PROBLEM WITH MAKING ADJUSTMENTS
. AND SO WE DON'T SEE THE NEED
FOR THIS KIND OF AN ADDITIONAL
PROVISIONS. BUT I APPRECIATE IT
TOTALLY UNDERSTAND YOUR
CONCERNS. I REALLY BASED ON WHAT
YOU SAID HAS ALREADY OCCURRING.
I WOULD ACTUALLY NOT FOR SEE IF
THIS CONTINUES TO YOU KNOW,
OCCURRED. THIS COORDINATION
COOPERATION. I WOULDN'T NOT SEE
ANY UM. ANY INVOLVEMENT TO
INTERFERE WITH THAT PARTICULAR.
IT'S PROBABLY NOT A LIABILITY
THE STATE WANTS TO TAKE ON OKAY?
WELL I THINK THE CONCERN IS THAT
WE SAW THE PRICE BAG HAPPENED
BECAUSE REFINERIES WENT DOWN
BEFORE AND KNOWING THAT THAT'S
ONE OF THE REASONS WHY PRICES
SPIKED. IT WOULD SEEM ODD TO ME
TO NOT ADDRESS THAT ISSUE. IF WE
WERE TRYING TO ACTUALLY ADDRESS
THE ISSUE. SOME OF THESE SOME OF
THESE SPIKES. WE DON'T KNOW
EXACTLY WHY THEY WENT. SORT OF
UNEXPLAINED, RIGHT? WE WE'VE
WE'VE HAD CONVERSATIONS. THERE'S
YOU KNOW EXPLANATIONS, BUT EVEN
THE PEOPLE WHO ARE EXPERTS WHO
YOU KNOW, DO THIS EVERY DAY FOR
A LIVING. CAN'T EXACTLY EXPLAIN.
ONE THING WE COULD EXPLAIN WAS
WHEN SUPPLY WHEN REFINERIES WENT
DOWN, SO IT SEEMED TO ME VERY
IMPORTANT TO BE ADDRESSED IN
THIS BILL. AND THANK YOU FOR THE
DISTINCTION OF PLANNED AND
UNPLANNED. ABSOLUTELY I THINK
IT'S A VERY IMPORTANT
DISTINCTION. AND I APPRECIATE
THAT. AND I THINK AGAIN, YOU
KNOW I DON'T THINK AGAIN.
THERE'S NOTHING IN HERE ABOUT
UNPLANNED SHUTDOWNS TODAY WE
WANT THEM. SOME PLANNED
UNPLANNED SHUTDOWNS TO BE DEALT
WITH IMMEDIATELY. APPRECIATE
AGAIN. APPRECIATE UH, YOUR
INDULGENCE, MR. CHAIR. THANK
YOU. ALLOW ME TO QUESTIONS.
THANK YOU, MR MURATSUCHI. THANK
YOU VERY MUCH, MR. MR CHAIR. UM
QUESTION FOR A COMMISSIONER,
GUNDA, UM SO I THINK MR
BORNSTEIN MADE IT CLEAR. UH HIS
OPINION THAT MOST OF
CALIFORNIA'S GAS PRICE PROBLEM
IS NOT AT THE REFINERIES, BUT
IT'S A DOWNSTREAM. UM BUT I
WANTED TO ASK YOU. I MEAN, THE,
UH IS PUTTING A LIMIT ON REFINED
NOT NOTWITHSTANDING MR
BORNSTEIN'S OPINION. DO YOU
STILL BELIEVE THAT PUTTING A
LIMIT ON REFINER'S PROFIT WILL
REDRESS BOTTOM LINE REDUCED
PRICES AT THE PUMP? YEAH I THINK
THE SHORT ANSWER. THANK YOU.
ASSEMBLYMEMBER'S FOR THAT
QUESTION WOULD BE YES. I MEAN, I
THINK THE THAT THE ISSUE THAT
WE'RE TRYING TO LOOK AT HERE IS
THROUGH THE BILL. YOU KNOW
THERE'S A NUMBER OF PROVISIONS
IF THE BILL WERE TO PASS IT
GIVES CC A PUBLIC PROCESS TO
REALLY EVALUATE THE BENEFITS AND
THE RISK. AT THE HIGH LEVEL AS
AS WE HEARD FROM DR BORNSTEIN
TODAY, YOU KNOW, WE HAVE
CONSULTED WITH A NUMBER OF
ECONOMISTS OVER THE LAST 34
MONTHS. THE OPINION IS VERY
VARIED, AND WE DON'T HAVE THAT
IN A PUBLIC TESTIMONY. WE DON'T
HAVE, UM PUBLIC DISCOURSE ON
THOSE ISSUES. SO WHAT SISI WOULD
DO ABOUT THAT? IT'S A RULE
MAKING PROCESS AND INFORMATIONAL
PROCEEDING. WOULD REALLY TAKE
THOSE ALL THOSE THINGS INTO
ACCOUNT. AND THEN IF WE SEE
THAT, THE THAT THE PENALTY IN A
GOOD GOOD HELP, IT IS WHERE WE
WOULD GO. SO I THINK IT'S PUBLIC
PROCESS. WE THINK THERE IS
OPPORTUNITY HERE TO MOVE TOWARDS
THAT WAY. AND THEN, UM. DR
BORNSTEIN'S, UH, QUESTION OR
CONCERN ABOUT MIXING. UH
STAKEHOLDERS, INCLUDING OIL
INDUSTRY REPRESENTATIVES IN THE
ADVISORY COMMITTEE. WHAT? WHAT
IS YOUR OPINION ON THAT. YEAH
IT'S A IT'S AN INTERESTING
ARGUMENT. I THINK YOU KNOW, WE
AT FCC HAVE A NUMBER OF
DIFFERENT INDEPENDENT ADVISORY
COMMITTEES. WE DO HAVE BOTH
EXPERTS AS WELL AS STAKEHOLDERS
IN THOSE AND WE HAVE SEEN
BENEFICIAL EFFORTS. AND I THINK
I UNDERSTAND THAT, UM, AT THE
THIS OPPORTUNITY TO DIG INTO
THIS DATA, UM YOU KNOW, SOME OF
THE OBSERVATIONS WE HAVE AT CC
IS WHEN WE HAVE A DIVERSE GROUP
OF ADVISORY COMMITTEE. THIS THIS
SPECIFIC EXAMPLE, EXPERTS TEND
TO HAVE SUB MEETINGS. AND
PROVIDE IN A MORE ANALYSIS AND
THOUGHT LEADERSHIP. SO FROM OUR
PERSPECTIVE, IT COULD HAVE SOME
BENEFICIAL. BUT I MEAN IS THE
PROPOSED UM, INDEPENDENT
CONSUMER FUELS ADVISORY
COMMITTEE. I MEAN, I WOULD HOPE
THAT THAT DOES NOT IN ANY WAY
RESTRICT THE ENERGY COMMISSION'S
ABILITY TO AND OPPORTUNITIES TO
CONSULT AS NECESSARY WITH
INDUSTRY EXPERTS. YEAH,
ABSOLUTELY. SO, I THINK THANK
YOU FOR YOUR KIND OF ADDING
THOSE ADDITIONAL THOUGHTS THERE
, SO WE DO HAVE A COUPLE OF
OPPORTUNITIES. ONE WOULD BE THE
ADVISORY COMMITTEE AND OBVIOUSLY
, AS MR BERNSTEIN MENTIONED, YOU
KNOW, IT'LL BE A GROUP OF
STAKEHOLDERS AND EXPERTS BUT AS
C C AS WE YOU KNOW, GO THROUGH
THE BUDGET PROCESS AND THE
FAVORABLE LANGUAGE WE WOULD. WE
WOULD DEFINITELY NEED ADDITIONAL
RESOURCES TO CONSULT WITH
EXPERTS SPECIFICALLY ON THIS
AREA. AND LAST, BUT CERTAINLY
NOT LEAST. I DON'T KNOW IF
THERE'S RADIOS. BOYD PROBABLY
KNOWS THIS, BUT I HAVE TO
REFINERIES IN MY ASSEMBLY
DISTRICT. I DO KNOW THAT. OKAY
SO ONE AND EL SEGUNDO AND ONE OF
COURSE IN TORRANCE, UM AND, UH
AND I KNOW THAT MISS BARRICADE
AND ASKED THE QUESTION. AND I
APOLOGIZE. I MAY HAVE MISSED
SOME OF THE RESPONSES, BUT
OBVIOUSLY, YOU KNOW MY
CONSTITUENTS IN EL SEGUNDO AND
IN TORRENTS ARE GOING TO BE
CONCERNED. UH YOU KNOW, SHARE
THE CONCERNS THAT THE
ENVIRONMENTAL JUSTICE ADVOCATES
WERE RAISING AYE. UM. I WASN'T
SURE IF THE BEACH CITIES AND
TORRENTS WOULD QUALIFY AS
ENVIRONMENTAL JUSTICE
COMMUNITIES, BUT NONETHELESS, I
KNOW THAT THEY WOULD BE
CONCERNED ABOUT THE
TRANSPORTATION FUELS TRANSITION
PLAN. CAN YOU TALK COMMISSIONER
? GUNDA, CAN YOU TALK TO? UM YOU
KNOW WHAT OPPORTUNITIES? UH MY
CONSTITUENTS. THE RESIDENTS OF
THE BEACH CITIES AND, UH AND
TORRANCE WHAT WE'LL HAVE IN
PARTICIPATING IN, UM THIS MULTI
STAKEHOLDER MULTI AGENCY
WORKGROUP. YEAH AND THANK YOU.
ASSEMBLYMEMBER'S FOR THAT IN A.
YOU KNOW, WE ALSO RECOGNIZE THAT
A NUMBER OF THE ELECTRICITY
RELIABILITY CONVERSATIONS WOULD
ALSO IMPACT FOR TWO TO YOUR
CONSTITUENTS. SO I THINK ONE OF
THE THINGS THAT WE ARE
CONTINUING TO LEARN IS THE
IMPORTANCE OF ENGAGING LOCAL
COMMUNITIES. SO WHAT WE S THE
WOULD DO IS ENSURE THAT WE HAVE
REGIONAL. UM YOU KNOW WHETHER
IT'S TOWN HALLS ARE WORKING
GROUPS TO REALLY TAKE INTO
PERSPECTIVE. TAKE INTO ACCOUNT
OF PERSPECTIVES OF EVERY REGION
THAT'S GOING TO BE IMPACTED
HERE. ALL RIGHT. THANK YOU VERY
MUCH, MR CHAIR. REMEMBER
VALENCIA. QUESTIONS, COMMENTS.
THANK YOU, MR CHAIR. JUST A, UH
, THOUGHT AND HELP ME WALK
THROUGH THIS SCENARIO. I THINK
IT'S IMPORTANT TO THINK THROUGH
THESE POLICIES, RIGHT? WE'RE
HEARING THAT THE PROPHET HAS
BEEN DOWNSTREAM AND THIS POLICY
IS INTENDED TO ADDRESS THE PRICE
GOUGING. UM IF AND WHEN THIS
POLICY DOES GET PAST EVALUATION
OF THOSE CONTRACTS TAKES PLACE.
WE FIND OUT THAT THE
PROFITEERING HAS BEEN TAKING
PLACE IN THAT COMPONENT. HOW
WILL THIS VILLA DRESS THAT
COMPONENT AND ALSO WHAT HAPPENS
IF THAT DOES NOT? THAT IS NOT
THE CASE. AS WELL. AND HOW WILL
THAT HELP REDUCE COSTS? IN AH,
GAS PRICES. THANK YOU. THANK
YOU. ASSEMBLYMEMBER'S I JUST
WANT TO BEGIN BY STATING, I
THINK THE 30,000 FT LEVEL.
THAT'S THE SINGULAR FOCUS AND
THE INTENT OF THIS IS TO BEGIN
WITH LITTERING THE BEHAVIOR IF
THERE IS MARKET POWER, AND IF
THERE IS INEFFICIENCY IN THE
MARKET DESIGN, THE BILL IS
REALLY SET TO EXPOSE THAT
CONVERSATION AND MAKE SHED LIGHT
SHED LIGHT. AND I THINK
ASSEMBLYMEMBER'S BAUER MENTIONED
, YOU KNOW, THE IN THE SUNSHINE
IS THE BEST WAY TO KILL THE
INFECTION. I THINK THAT THE
IMPORTANCE HERE IS TO MAKE SURE
THAT WE HAVE THE ANALYSIS. WE
HAVE THE DATA AND WE HAVE THE
PATHWAY TO BRING THE
TRANSPARENCY TO YOU ALL THAT'S
THAT'S THINGS THAT ARE
OCCURRING. I THINK WE BELIEVE
THAT WOULD BE A HUGE DETERRENT
AND FROM FROM OUR PERSPECTIVE,
IF WE NEVER COLLECTED A SINGLE
DOLLAR IN THIS, THAT WOULD BE
GREAT. SO THEN THE QUESTION
BECOMES, AS WE DIG INTO THIS
INFORMATION IF WE FIND THAT THE
MARGINS ARE THAT THE ACTUAL
IMPACT OF THE RETAIL MARGINS ARE
HIGHER. THAT'S SOMETHING THAT
CDT F A AND C C IS ASKED TO
REVIEW AND WE'LL COME BACK TO
YOU WITH THE DATA AND THEN WE
WILL CONTINUE TO LOOK INTO IT.
AND THAT SCENARIO. IF THAT WERE
TO BE THE OUTCOME, THEN IT WOULD
BE THE FIRST STEP IN A CONTINUED
PROCESS. AWESOME. THANK YOU.
THANK YOU ANY OTHER QUESTIONS OR
COMMENTS, PLEASE? YES THANK YOU
, CHAIR AND REALLY APPRECIATE
THE DISCUSSION. I HAVE A FEW
QUESTIONS BUT ONE TO START WITH
NOTING I THINK THIS, UH,
APPROACH IS LONG OVERDUE. AND
APPRECIATE THE WORK THAT'S GONE
INTO THE BILL SO FAR. UM WHAT WE
KNOW IS A FACT IS A CALIFORNIA
RESIDENTS ARE PAYING HIGHER
PRICES AT THE PUMP. AH THAN ANY
OTHER STATE. WE KNOW FOR A FACT
IT'S HAVING A TREMENDOUS IMPACT
ON CONSUMERS AND ALL OF OUR
DISTRICTS. UM. WE KNOW FROM AS A
FACT FROM WHAT WE'RE SEEING.
THIS IS NOT EXPLAINED BY, UH,
TAXES OR REGULATIONS ALONE. UM
AND FROM THE EVIDENCE WE'RE
SEEING AND I KNOW THERE'S A
DEBATE GOING ON. AH BUT I HAPPEN
TO BELIEVE THAT, UM, WE ARE
SEEING EXCESSIVE PROFITEERING.
IT COULD BE HAPPENING AT VARIOUS
LEVELS IN THE CHAIN. BUT IT'S
SOMETHING WE NEED TO GET TO THE
BOTTOM OF UH, AND THAT THERE IS
OUTRIGHT PRICE GOUGING GOING ON
BY THE OIL INDUSTRY, UH, DOING
BUSINESS IN THIS STATE. SO WHERE
THIS IS LONG OVERDUE IS REALLY
CREATING A MECHANISM FOR MORE
TRANSPARENCY DATA COLLECTION. UH
PROVIDING THE TOOLS FOR A
DETAILED INVESTIGATION. ONE OF
MY QUESTIONS, AND, UM I WAS
GONNA THROW IT OVER TO MISS
BLOOM AND COMMISSIONER GUNDA AND
AS A FORMER DEPUTY ATTORNEY
GENERAL. I'M VERY COGNIZANT OF
THE VALUE OF THE SUBPOENA POWER.
UH TO EXPLORE AS USE. UM HOW
WOULD UH, THE SUBPOENA POWER BI
KIND OF ADDRESSED IN THIS
SITUATION. WHAT'S THE IMPORTANCE
OF IT? MAYBE IF YOU CAN
ELABORATE FOR MEMBERS OF THE
PUBLIC ON THAT. SO UH, I THINK
THEY'RE TWO DIFFERENT PIECES OF
THIS PROPOSAL. YOU'RE
REFERENCING THERE. ONE IS, UM,
GIVING SUBPOENA POWER TO SEE SEE
, I WILL GIVE OUT TO UGANDA TO
TALK ABOUT THE OTHER IS THE
OPPORTUNITY TO FOR THE CC TO
REFORM OUR MATTERS OVER TO THE
ATTORNEY GENERAL'S OFFICE FOR
PROSECUTION. THAT IS THAT IS
SOMETHING THAT WE VERY MUCH
WELCOME. WE WON'T WELCOME THOSE
REFERRALS. I THINK HAVING THE
MARKET HAVING A MARKET OVERSIGHT
BODY HAVING A REGULATORY BODY.
AH IN PLACE THAT IS GATHERING
INFORMATION. WITH GRANULARITY
WITH SPECIFICITY. AND
INFORMATION THAT IS TIMELY AND
RELEVANT TO WHAT? WHAT WE AND
WHY CC NEED TO KNOW ABOUT WHAT'S
HAPPENING IN THIS MARKET IN
ORDER TO IDENTIFY, UM
POTENTIALLY ILLEGALITY AND THE
FUTURE HAVING THAT OVERSIGHT
BODY HAVE THAT INFORMATION HAVE
THE OPPORTUNITY TO ANALYZE IT
AND THEN REFERRED OVER TO THE
ATTORNEY GENERAL'S OFFICE. IS
POTENTIALLY A VERY POWERFUL TOOL
FOR THE STATE. WE KNOW AS HAS
BEEN EXPRESSED THROUGHOUT THIS
CONVERSATION THAT TRANSPARENCY
DRIVES MARKET INTEGRITY CAN
DRIVE MARKET INTEGRITY. WE MAY
SEE THAT THAT ENTITIES
THROUGHOUT THIS MARKET BEHAVE
BETTER WHEN THEY HAVE TO REPORT
A LOT OF FAIRLY BASIC BUT
IMPORTANT INFORMATION TO THE
ENERGY COMMISSION, AND THERE IS
THE OPPORTUNITY FOR THAT TO BE
ANALYZED AND SCRUTINIZED AND
UNDERSTOOD. WE ALSO KNOW THAT
THAT THERE WILL BE FUTURE
DISRUPTIONS. THERE WILL BE
FUTURE. UH, FUTURE. REFINERY
OUTAGES THERE WILL BE POTENTIAL
GEOPOLITICAL CONCERNS. THERE
WILL BE OTHER REASONS WHY THERE
IS DISRUPTION IN THE MARKET AND
THE DISRUPTION CREATES
OPPORTUNITY FOR MARKET
MANIPULATION. AND SO I THINK
THAT THERE'S A LOT TO BE GAINED
JUST FROM THE TRANSPARENCY PIECE
HERE SO THAT WE AND THE CC HAVE
THAT HAVE THE OFFER TO NITTY TO
HAVE THAT INFORMATION. AT THE
OUTSIDE AND ALSO THEN CAN CAN
TAKE THOSE REFERRALS FROM CC FOR
POTENTIAL PROSECUTION. THANK YOU
. THANK YOU. ASSEMBLYMEMBER'S
FOR THAT QUESTION. SO
HISTORICALLY, YOU KNOW, IN MOST
OF THE EIGHTIES INVESTIGATIONS
THAT THAT YOU MIGHT ALREADY KNOW
THAT SISI DOES HAVE A HAVE A
ROLE IN PROVIDING INFORMATION.
WE TYPICALLY TAKE WHATEVER
INFORMATION WE HAVE AND PROVIDE
THAT AS, UM, INFORMATION FOR
THEM TO, YOU KNOW, TAKE INTO
ACCOUNT AS THEY'RE PURSUING.
THEIR THEIR THEIR WORK AND ALSO
IN A WE PROVIDED EXPERTISE TO
THE EXTENT THAT WE CAN IN THIS
CASE, YOU KNOW, JUST
ACKNOWLEDGING THAT THIS
INDEPENDENT DIVISION IS
SOMETHING THAT THE EXPERTISE WE
DO NOT CURRENTLY HAVE. WE ARE
CALLING FOR NEW EXPERTISE HERE
THAT AS DR BERNSTEIN TALKED
ABOUT, YOU KNOW, COMPETITION,
YOU KNOW, POLICY. HOW DOES THAT
WORK? AND THAT'S NOT WHAT THE
BREAD AND BUTTER FOR CSC TODAY
IS. SO THIS INDEPENDENT DIVISION
REALLY IS A BRIDGE BETWEEN
WHAT'S THE CURRENTLY DOES AND
WHAT THE AGES WORK IS AND REALLY
HELP WITH BRIDGING THAT
INFORMATION AND BY DOING MORE
AND HAVING THAT SUBPOENA POWER
FOR THEM WILL HELP GATHERING
INFORMATION IS NEEDED. GREAT UH
, ANOTHER QUESTION. SO IF
PENALTIES ARE ASSESSED, UM WOULD
THOSE BE PASSED ONTO THE
CONSUMER? ALTERNATIVELY WHAT
GUARANTEES WOULD CONSUMERS HAVE
THAT THEY WOULD NOT BE PASSED ON
TO THE CONSUMER? ASSEMBLYMAN
TAKE HER AGAIN MY CURRENT
UNDERSTANDING FROM THE BILL AND
FROM THE DISCUSSIONS IS THAT
WOULD BE PUT IN A SPECIAL FUND
FOR THE LEGISLATURE TO
APPROPRIATE AS THEY SEE FIT IN
IN IN ENSURING CUSTOMER
PROTECTION. IN TERMS OF LIKE AN
OIL COMPANY HAVING TO PAY A
PANEL TO YOU, THOUGH, WOULD, UH
ARE THERE GUARANTEES OR
ASSURANCES THAT THAT WOULD NOT
ITSELF CREATE PRICE INCREASES?
YEAH THAT'S A GREAT QUESTION,
AND I THINK A PART OF THE OF THE
STATUTE WOULD BE FOR C. EASY TO
WEIGH THAT. AS WE DEVELOP OUR
PENALTY, AND I THINK, AS WE
HEARD OVER THE LAST TWO MONTHS,
THERE ARE REALLY GOOD ARGUMENTS
ON EVERY SIDE THAT WE AS AS AN
AGENCY HAS TO CONSIDER IN MAKING
SURE THAT WE SET ONE THE MARGIN
LEVEL BUT ALSO THEN EXECUTING
THAT PENALTY AND I WANT TO TAKE
THIS OPPORTUNITY TO JUST ALSO
MENTIONED THAT THIS WILL NOT BE
DELEGATED TO AN EXECUTIVE
DIRECTOR OR SOMEBODY. THIS WILL
BE A STAFF RECOMMENDATION COMING
UP TO THE COMMISSION AND ALL
FIVE COMMISSIONERS HAVE TO ACT
ON THAT INFORMATION. THANK YOU.
QUESTIONS OR COMMENTS. PLEASE.
THANK YOU. I APPRECIATE IT.
CONNOLLY'S QUESTIONS ABOUT UH,
ABOUT THE. THE DUAL ROLES OF THE
C C AND THE ATTORNEY GENERAL'S
OFFICE, ALSO AS A FORMER DEPUTY
TURNING CENTRAL. UM I WANTED TO
GO GOING BACK TO DR BORNSTEIN'S
CONCERNED ABOUT HOW THE BIGGEST
COST HIS IS DOWNSTREAM. SO I
MEAN IS THE. DOES THE BILL, UM,
PROVIDE SUFFICIENT SUBPOENA
POWER TO GET THOSE COMPLEX TO
TRY TO UNDERSTAND THE COMPLEX
DOWNSTREAM CONTRACT? CONTRACTING
SCHEME. THANK YOU, ASSEMBLYMAN.
WE BELIEVE SO. I THINK YOU KNOW
YOU'RE ALREADY SPECIFYING A
NUMBER OF DATA STREAMS THAT
WOULD BE EXTREMELY HELPFUL BASED
ON OUR BEST UNDERSTANDING OF THE
MARKET TODAY AGAIN, OUR
UNDERSTANDING IS LIMITED BASED
ON THE OPAQUENESS OF THE
INDUSTRY TODAY. UM AND SO SOME
OF THE DATA INFORMATION IS KIND
OF CONSULTED WITH EXPERTS IN THE
INDUSTRY AS WELL AS ACADEMIA.
BUT THIS ADDITIONAL SUBPOENA
POWER WILL ALLOW US TO DIG INTO
ANY OTHER DETAILS. WE HAVE BEEN
MISSING. THANK YOU. VERY
QUESTIONS. THANK YOU. I WILL SEE
A HAND UP, PLEASE. YOU ARE ON
MUTE. WHEN WE DON'T KNOW HISTORY
. UH WE, UH, HAVE A GREAT
DISADVANTAGE. ALL OF THE DATA
AND ELECTRICITY WAS BASICALLY
SECRET IN 2000. BY 2002. WE HAD
PRELIMINARY SYSTEMS UP. I HELPED
WORK ON THOSE WORK. TODAY ON THE
WEB. THERE'S 600 MILLION TRADES
OVER THE LAST YEAR. ANYONE HERE
CAN LOG INTO THE FDR C GO THE
ELECTRIC QUARTERLY REPORT PAGE.
IN FIND OUT THIS SPECIFIC PRAISE
OF ADDING MARKET PLAYER. THAT'S
HAD A TREMENDOUSLY POSITIVE
AFFECT. UH, SEVERANCE COMMENT
ABOUT. MAKING SURE THE EXPERTS
CAN EXCHANGE DATA IS CRITICAL.
BUT THE MORE PUBLIC THAT DATA IS
THE LAST REGULATORY INTERVENTION
WILL BE REQUIRED. THERE IS
NOTHING PARTICULARLY SECRET
ABOUT THIS DATA. THE OPRAH
SUBSCRIBERS TALKED TOGETHER ON A
CHAT ROOM WAS THAT TRADES ANYONE
WHO'S ON THE CHAT ROOM WILL KNOW
WHAT'S GOING ON. SO WHAT WE'RE
TALKING ABOUT IS JUST LEVELING
THE PLAYING FIELD BETWEEN THEY
CONSUMERS AND THE LOSERS AND ONE
LAST COMMENT. I ENJOYED
SEVERANCE DEBATE WITH JAMIE.
WITH MY RESPECT, HIGHLY. BUT
THIS IS THE OLD STORY OF THE SIX
MEN. SIX WISEMAN IN THE
ELEPHANT. UNTIL WE ACTUALLY HAVE
ACCESS TO DATA THAT WE CAN TALK
ABOUT. WE'RE NOT GOING TO BE
CLEAR ANSWER. I'VE HAD ACCESS TO
THE CONTRACTS. THEY ARE
PARTICULARLY SECRET WILL. OF
COURSE, THERE ARE ALSO SUBJECT
TO CONFIDENTIALITY. AND ALL THE
PLAYERS IN THE MARKET NOW WHAT
THE CONTRACTS ARE LIKE. WE ARE
THE ONLY PEOPLE WHO CAN TALK
WITH THE CONTRACTS ARE LIKE SO.
EVERYTHING WE CAN DO TO LEVEL
THE PLAYING FIELD WILL LOWER
PRICES. CERTAINLY. BUT ALSO MAKE
OUR LIVES EASIER. THANK YOU VERY
MUCH, MR MCCALL. I'M GOING TO
ASK MR SEVERING BORNSTEIN, IF
YOU'LL LIKE TO CLOSE WITH ONE
MINUTE WRAP UP AND THEN WE'LL GO
BACK UP TO THE AGENDA OR DOWN
THE PANELISTS. AS WE WRAP UP
THIS CONVERSATION, GO TO PUBLIC
COMMENTS, BRING IT BACK TO THE
DIETS AND THEN CLOSE THIS OUT
FOR THE DAY. I'M JUST GRATEFUL
TO THE DIALOGUE THAT WE'VE HAD
HERE TODAY. WE'VE LEARNED A LOT
AND LOOKING FORWARD TO THE
CONTINUED CONVERSATION. SO
PLEASE, UH, MR BERNSTEIN, AND
THEN WE'LL START AT THE TOP OF
THE AGENDA. ONE MINUTE IN
CLOSING, PLEASE. I'M NOT SURE I
HAVE A LOT MORE. DAD I THINK
THAT THIS BILL IS MOVING IN THE
RIGHT DIRECTION. I DON'T THINK
IT IS LOCKING IN PARTICULAR
PRICE GOUGING PENALTY, BUT
RATHER GIVING US THE RESOURCES
TO DO A GOOD ANALYSIS. AND I
THINK THAT, UH, THAT WILL HELP
US REALLY UNDERSTAND WHERE THE
PROFITS ARE COMING FROM OR THE
HIGHER PRICES ARE COMING FROM.
MY OWN WORK SUGGESTS THAT IT'S
GOING TO BE LARGELY DOWNSTREAM,
AND THAT MEANS WE'RE GOING TO
HAVE A LOT MORE WORK TO DO. BUT
I THINK THAT, UH, THE
TRANSPARENCY AND ABILITY TO HAVE
REAL EXPERTISE IS A BIG STEP IN
THE RIGHT DIRECTION. AND I WILL
JUST SAY ONCE AGAIN, IT WILL BE
MUCH MORE EFFECTIVE IF THERE IS
A COMMITTEE OF EXPERTS IN
COMPETITION POLICY. WHO CAN WORK
TOGETHER AND WITH AND WITH THIS
DIVISION. THANKS. THANK YOU.
WE'LL GO UP TO THE COMMISSIONER.
THANK YOU, JERRY GARCIA AND THE
MEMBERS OF THE COMMITTEE. THANKS
FOR THIS OPPORTUNITY TO BE HERE
AND TALK ABOUT THE GOVERNOR'S
PROPOSAL. UM YOU KNOW, WE AS A C
C, YOU KNOW, STAND READY TO
SUPPORT WHATEVER THE LEGISLATURE
DECIDES. THIS IS AN EXTREMELY
IMPORTANT WORK FROM OUR
PERSPECTIVE. WE ARE, REALLY, UM
UM YOU KNOW, REALLY THRILLED BY
THE GOVERNOR'S PUSH ON ENSURING
CONSUMER PROTECTION. I THINK
THIS IS A BIG ISSUE AS WE MOVE
TOWARDS ENERGY, TENS ISHAN AND
DOING THIS IN A WAY THAT DOESN'T
AFFECT THE CONSUMERS AND
PROTECTING THEM IS EXTREMELY
IMPORTANT. SO WE ARE HERE TO
SERVE THE PUBLIC SERVE. YOU
SERVE THE ADMINISTRATION. SO
LOOK FORWARD TO WORKING WITH YOU
CLOSELY. THANK YOU. THANK YOU,
CHAIR AND MEMBERS OF THE
COMMITTEE. I REALLY APPRECIATE
THE CONVERSATION TODAY, AND I
APPRECIATE THROUGHOUT THIS
CONVERSATION, SEVERAL SEVERAL
MEMBERS BRINGING THE
CONVERSATION BACK TO THE PEOPLE
WHO ARE MOST AFFECTED BY THE
REFINERIES BY THEIR OPERATIONS
AND BY THE RETAIL GAS PRICES. I
THINK THAT IS A THAT IS AT THE
CORE OF THE PROPOSAL. HERE IT IS
AT THE CORE OF MY CONCERN AND
OUR CONCERN AT THE ATTORNEY
GENERAL'S OFFICE. WE KNOW THAT
THE RECORD HIGH RETAIL GAS
PRICES ARE BEING PAID BY THOSE
WHO CAN LEAST AFFORD TO PAY IT
RIGHT AND WE KNOW THAT THE
RECORD PROFITS ARE COMING OUT OF
THE POCKETS OF THOSE WHO CAN
LEAST AFFORD TO PAY IT AND ON
THE BACKS OF THOSE WHO ARE
LIVING NEXT TO REFINERIES. WHO
ARE WORKING IN AND SOMETIMES
VERY CHALLENGING CONDITIONS, AND
THAT BRINGING THOSE VOICES INTO
THIS CONVERSATION IS
EXTRAORDINARILY IMPORTANT, AND
WE HAVE A REALLY IMPORTANT
OPPORTUNITY IN FRONT OF US WITH
SBX 1-2 TO ADDRESS THE OPACITY
AND OBFUSCATION THAT HAS
FACILITATED. MISCONDUCT AND.
IMPEDED THE ABILITY OF THE STATE
TO OVERSEE AND ADDRESS THE VERY
REAL CHALLENGES IN THIS MARKET.
SO THANK YOU. THANK YOU IN THE
ORDER OF THE AGENDA. EXCELLENT.
IT IS KATHERINE. UH, HIS BOY.
THANK YOU. YEAH, I THINK NEXT
YEAR UM SO, BASICALLY, THANK
YOU, MR CHAIRMAN AND MEMBERS OF
THE COMMITTEE. UM COUPLE OF
THINGS I WOULD SAY IS ONE I
DON'T THINK AND CONTINUE TO
BELIEVE A WINDFALL PROFITS TAX
WILL NOT ADDRESS THE PROBLEM
WE'RE TRYING TO SOLVE I THINK
THERE ARE ECONOMISTS IN THIS
ROOM WHO AGREE WITH THAT. UM, I
THINK THAT YOU KNOW, HAVING THE
ENERGY COMMISSION, UM, STUDYING
RECOMMEND SOME REFINING MARGIN
PENALTY DISCUSSION, RATHER THAN
GIVING THEM THE AUTHORITY TO DO
SO. WOULD BE A BETTER PATH. WE
TALKED ABOUT THE DESIRE TO, UM,
SUPPLY MORE INFORMATION ON
TURNAROUND SCHEDULES AND TIMING
, BUT NOT IN MY OPINION, EXTEND
THAT TO GIVING THE AUTHORITY TO
THE C E. C TO DICTATE WHAT THOSE
ARE. UM AND ALSO STRENGTHENING
AND I'M CURIOUS COMMISSIONER
DUNDAS VIEW OF THIS BUT
STRENGTHENING THE
CONFIDENTIALITY AS THE
COMMISSION BROADENS THE, UM,
SCOPE OF DIFFERENT ENTITIES
RECEIVING THIS INFORMATION
BECAUSE THAT KIND OF
CONFIDENTIALITY PROTECTION IS A
VERY, VERY IMPORTANT PIECE THAT
WE ACTUALLY ALL AGREE ON. AND SO
MAKING SURE THAT THERE IS A
STRENGTHENING OF THE
CONFIDENTIALITY AS WE GO THROUGH
THIS PROCESS IF THE BILL IS
PASSED UM AND THEN I WOULD JUST
SAY ON THE LOCAL LEVEL, LET'S
NOT BAN ANYMORE GAS STATIONS
BECAUSE IT JUST LESSENS
COMPETITION. AND I'M SURE MY
FRIEND JOHN, WE'LL TALK ABOUT
THAT. AND THEN, LASTLY, THE FUEL
TRANSITION STUDY THAT THE
COMMISSION IS UNDERTAKING.
COMMISSIONER GUNDA KNOWS HOW
IMPORTANT I FEEL. THAT STUDY IS
AS WE LOOK AT HOW WE GET FROM A
TO B AND THAT THAT FOCUS ON SOME
OF THE ISSUES THAT THE BILL I
THINK IS LIMITED ON WHICH IS
REALLY LOOK AT WHAT THE ENERGY
COMMISSION HAS SAID IN FIVE
INTEGRATED ENERGY POLICY REPORTS
SUPPLY CAPACITY OF REFINERS
INFRASTRUCTURE NEEDED TO MAKE
SURE WE CAN DO WHAT WE'RE ALL
HERE FOR, WHICH IS TO BRING MORE
SUPPLY AND REDUCE COST CONSUMER.
THANK YOU. YEAH, THANKS. UM,
DON'T HAVE TOO MUCH TO ADD. I
JUST, UM WOULD WOULDN'T
REITERATE WHAT WHAT I SAID IN MY
TESTIMONY THAT YOU KNOW, ON THE
RETAIL LEVEL THE MARK THE, UH,
FIXED COSTS OF RAISED
DRAMATICALLY IN THE LAST 5 TO 10
YEARS. I WOULD ALSO SAY, UM THE
ENVIRONMENTAL IN THE FEES HAVE
NOT STAYED STAGNANT. THERE'S A
LOT MORE ENVIRONMENTAL COSTS
THAT GO INTO OUR BUSINESS THAT
ARE NOT BEING INCLUDED IN THAT
ANALYSIS. IT'S NOT JUST CAP AND
TRADE. NOT JUST L. C. F S. WE
HAVEN'T ENHANCED VAPOR RECOVERY
TO CLEAN TRUCK RULES. WE HAVE,
UM A LOT OF TESTING AND
CERTIFICATION ADDED REQUIREMENTS
AT THE LOCAL LEVEL AND AT THE
STATE LEVEL OVER THE LAST AH,
FIVE YEARS AND SO THAT THAT ALL
GOES INTO THE COST OF DOING
BUSINESS. WE'VE SEEN A LOT OF
MERGERS AND ACQUISITIONS IN OUR
IN OUR SPACE, WHICH IS TRIGGERED
PROP 13 REASSESSMENTS INCREASED
LAND COSTS BECAUSE A LOT OF
SMALL OWNERS ARE GETTING OUT OF
THE BUSINESS BECAUSE IT'S JUST
TOO HARD IN CALIFORNIA, OR
THEY'RE SWITCHING TO BRANDED,
WHICH PRODUCES COMPETITION EVEN
EVEN FURTHER AND THEN. AS AS I
MENTIONED, THERE'S 11 CITIES
THAT HAVE ALREADY BANNED THE
CONSTRUCTION OF NEW GAS
STATIONS. THERE'S MORE COMING.
UM AND THAT ACTUALLY INHIBITS
OUR ABILITY TO DEPLOY GAS
STATIONS THAT HAVE ALTERNATIVE
FUELS THAT HAVE E V CHARGING
STATIONS. THAT'S THE PATH THAT
WE'RE TRYING TO GO. WE'RE TRYING
TO BE A PART OF THE OF THE
TRANSITION AND UM, AS I SAID, IN
MY IN MY COMMENTARY, THE SUPPLY
AND DEMAND IN BALANCE CANNOT BE
BE FIXED WITH AN E. V ONLY
STRATEGY. WE NEED TO EMBRACE
ALTERNATIVE FUELS. WE NEED TO
START REDUCING TAILPIPE
EMISSIONS NOW WITH ALTERNATIVE
FUELS, WHICH WE CAN WE CAN
DEPLOY FAIRLY EASILY. AND SO WE
DO HAVE YOU KNOW CONCERNS WITH
HOW ARE SMALL BUSINESSES ARE
GOING TO COMPLY WITH THE AMOUNT
OF DATA THAT'S REQUIRED IN THIS
IN THIS BILL, AND THEN WE WOULD
ALSO AGREE WITH THE
CONFIDENTIALITY ISSUE AND
TIGHTENING THAT UP. THANK YOU. I
THINK WE SKIPPED OVER ROBERT
MCCULLOCH. IF YOU'RE STILL ON
THINK HE LEFT IN HIS CLOSING
COMMENTS CLOSE. OKAY SORRY.
ALRIGHT SORRY, THAT I JUST WANT
TO THANK YOU GUYS FOR FOCUSING
ON THIS. I'VE BEEN WAITING FOR
TWO DECADES. I'VE BEEN I SAT ON
THAT ATTORNEY GENERAL TASK FORCE
WITH MANY OF THE SAME VOICES
SAYING THE SAME THINGS I HEARD
THOSE BUREAUCRACY TAXES,
REFINING CAPACITY. BY THE WAY, I
THINK WE STARTED WITH 15
REFINERIES AND, UH IN 2000, SO I
DON'T KNOW WHERE WE GOT THIS
NUMBER. WE WENT DOWN FROM 35 TO
14 TO 11. I THINK WE'RE AT 15.
AND WE'RE AT 14 NOW. WE HAVEN'T
HAD MUCH REFINING CAPACITY OF
STATE. THAT'S NOT GOING TO
CHANGE WE'VE BUILT ON CAPACITY
TO THE EXISTING REFINERIES. BUT
THE FACT IS YOU HERE. YOU'RE
HERE TO STAND UP FOR YOUR
CONSTITUENTS, AND THERE IS
NOTHING IN THIS BILL THAT DOES
HARM. THIS IS ABOUT PROVIDING
INFORMATION. AND IT'S MOSTLY
ABOUT BIG COMPANIES. FIVE OIL
REFINERS PROVIDING INFORMATION
THEY HAVE THE CAPACITY TO
PROVIDE THAT INFORMATION. THIS
BIG THING ABOUT SP 13 22 BEING
SO CUMBERSOME. WE NEED THE RULE,
MAKING THE ONLY THING THEY NEED
TO PROVIDE ON SP 13 22 WAS THE
COST OF CRUDE OIL AT THEIR
REFINERIES. THE PRICE OF
GASOLINE AT THE OTHER END OF
THEIR REFINERIES. AND THE
DIFFERENCE BETWEEN THE TWO MINUS
TAXES, WHICH IS THE GROSS
REFINING MARGIN. THOSE THREE
NUMBERS ARE ALL THEY HAD TO
PROVIDE, AND THEY WANTED THE
RULEMAKING AND CHEVRON EVEN
THREATENED NOT TO DO THAT. BUT
CHEVRON WAS ANSWERED BY THE CDC
SAYING YOU GOTTA DO WE'RE GONNA
HAVE ENFORCEMENT ACTUALLY TURNED
THE NUMBERS IN THE LAST DAY.
THIS IS NOT CUMBERSOME AND WITH
THE PRICE GOUGING PENALTY. IF
THEY'RE NOT PRICE GOUGING, THEY
WON'T BE PENALIZED. WHAT? WHAT
IS THE PROBLEM? UH, I REALLY
THANK YOU GUYS FOR TAKING ON
THIS THING ON BEHALF OF YOUR
CONSTITUENTS BECAUSE THEY NEED
YOU TO GIVE THESE POWERS TO A
STATE AGENCY BECAUSE WE CAN'T
TRUST THE OIL INDUSTRY ANYMORE
TO DO THIS ON THEIR OWN. THAT'S
WHAT IT COMES DOWN TO. WHO DO
YOU TRUST? SO I REALLY
APPRECIATE YOUR TIME. YOUR
ATTENTION AND YOU HOPEFULLY
PASSING SBX 12 NEXT WEEK. THANK
YOU TO ALL THE PANELISTS WHO
HAVE WHEN I COULD. TIME WITH US
THIS AFTERNOON AND TO THE
MEMBERS WHO WHO PARTICIPATED AT
THIS TIME WE'RE GOING TO, UM,
ASK AND OPEN UP THE PUBLIC
COMMENT. PERIOD. AND SO THOSE
WHO ARE HERE WITH US ARE WELCOME
TO COME BEFORE US. STATE YOUR
NAME? AFFILIATION AND SHARE YOUR
THOUGHTS WITH US, UH, IN ONE
MINUTE. UH, AND SO THAT EVERYONE
HAS A CHANCE TO SPEAK. AND SO
THAT WE MAY CONTINUE WITH
BUSINESS OF. MY COLLEAGUES HERE
FOR THE REST OF THE EVENING. I
KNOW THERE'S STILL SOME THINGS
THERE, SO PLEASE. SHORT LINE. I
THINK IT WILL BE FINE.
CHRISTINA'S PARENTS FOR THE
CENTER FOR BIOLOGICAL DIVERSITY
AND STRONG SUPPORT OF THIS
ACTION TO HOLD THE OIL INDUSTRY
ACCOUNTABLE. THE TRANSPARENCY
PROVISIONS TO GAIN INFORMATION
FROM REFINERS, RETAILERS AND
MARKETS ARE CRITICALLY IMPORTANT
THAT THIS INDUSTRY HAS ESCAPED
SCRUTINY FOR SO LONG. IT'S
PARTICULARLY APPALLING, GIVEN
HIS LONG HISTORY OF LYING TO THE
PUBLIC ABOUT CLIMATE, SCIENCE
AND POLICY. THE PRICE GOUGING
PENALTY MUST BE AS STRONG AS
POSSIBLE TO MEET THE URGENCY OF
THE MOMENT, INCLUDING A FIXED
MAXIMUM MARGIN LOW ENOUGH TO
PROTECT AGAINST PRICE GOUGING.
CIVIL PENALTIES HIGH ENOUGH TO
NEGATE INCENTIVES TO IGNORE OR
CIRCUMVENT THE LAW. WHILE
AVOIDING ANY LOOPHOLES. WE'D
HOPED THESE WOULD BE INCLUDED IN
THE BELL. AND WILL URGE THE
COMMISSION TO INCORPORATE THEM.
WE SUPPORT CALLS FROM THE
COMMUNITY FOR LANGUAGE IN THIS
OR ADDITIONAL LEGISLATION TO
REQUIRE THE DEVELOPMENT AND
IMPLEMENTATION OF A
TRANSPORTATION FUELS TRANSITION
PLAN. END OIL INDUSTRY PRICE
GOUGING FOR GOOD. PLEASE PASS
THIS BILL AND NEXT DO MORE TO
END FOSSIL FUEL PRODUCTION AND
CONSUMPTION. YET AGAIN THIS WEEK
, THE IPCC MADE CLEAR THAT THERE
IS NO MORE TIME TO WASTE. THANK
YOU. THANK YOU. GEMSTONE OF
STONE ADVOCACY ON BEHALF OF
CONSUMER WATCHDOG, WHICH IS PART
OF A LARGE COALITION OF OVER 100
GROUPS IN SUPPORT OF SB X 12. I
WILL NOT READ THEM ALL OUT LOUD,
BUT IT IS A LARGE GROUP OF
CONSUMER ENVIRONMENTAL ACTIVIST
GROUPS. THANK YOU SO MUCH. THANK
YOU. ANYONE ELSE WISHING TO
SPEAK? IN THIS SEGMENT. OKAY
PUBLIC HEARING PUBLIC COMMENTS
IS NOW CLOSED. JUST WANT TO
THANK AGAIN ALL THE PANELISTS
FOR THEIR TESTIMONY THEIR
PARTICIPATION TODAY. AND WE HAVE
CONCLUDED OUR AGENDA OR THE
ASSEMBLY COMMITTEE, UTILITIES
AND ENERGY SPECIAL SESSION.
THANK YOU AGAIN.