LITTLE ROCK, Ark. — Just a few weeks ago, Idaho-based truck driver J. Savage had to spend more than $500 to fill up his big rig. At today’s prices of just around $4 per gallon, it costs him about $480.
While not a huge savings, Savage said it means more money in his pocket at a time when the economy is very tight.
“Every bit adds up,” he said on Thursday, March 23, at a truck stop in Little Rock.
The average price for a gallon of diesel fuel in the U.S. has been trickling down since late January, now sitting at $4.185, according to the Energy Information Administration (EIA).
California — which consistently has the highest diesel prices in the nation due to strict regulations — has also seen a drop in the average price. Despite that, state leaders are considering punishing big oil companies for gouging customers.
According to the EIA, the current average price for a gallon of diesel in the Golden State sits $5.260. That’s down from around $5.50 per gallon on average in January.
“It can mean the difference between paying bills on time or not,” said California trucker Eddie Sanders. “I mean, some people say that it isn’t much of a savings, but to me it really is. I know that I’d like to see it down around $4 a gallon for sure, but I will take what I can get right now.”
With rising diesel reserves and easing demand, diesel prices have been in a slow decline for seven straight weeks.
Along the Gulf Coast, drivers will find the cheapest prices in the nation at $3.930 per gallon on average.
Patrick De Haan, head of petroleum analysis at GasBuddy, said, “While oil prices edged slightly lower on weaker outlooks for economic growth, continued refinery maintenance and the higher cost of seasonal blends of fuel are offsetting oil’s decline. The price of diesel, however, continues to slowly decline as we see consumption for diesel lighten up. The best news for both gasoline and diesel prices is how significant a drop we’ve seen from year-ago levels, with more disinflation to come in the weeks ahead, even as gas prices are likely to inch up.”
Meanwhile, a first-in-the-nation bill to punish oil companies for profiting from price spikes at the pump breezed through the California Senate on Thursday at the urging of Democratic Gov. Gavin Newsom, the first major vote in an effort to pass the law by month’s end.
The proposal is in response to sales last summer, when the average price of a gallon of gasoline in California soared to a record high $6.48. Drivers in some places paid as much as $8 per gallon, prompting widespread outrage in an election year.
Newsom, a Democrat, reacted by attacking the oil industry, specifically the five companies that provide 97% of fuel in the state. He asked the Democratic-controlled state Legislature to pass a new tax on oil company profits, arguing it would protect consumers by preventing price spikes.
That idea went nowhere in the Legislature, as lawmakers feared it would create chaos in the petroleum market and cause companies to make less fuel, thus increasing prices.
Instead, lawmakers and Newsom settled on a bill that would let the California Energy Commission decide whether to impose civil penalties on oil companies for price gouging. The commission – a five-member panel appointed by the governor with the consent of the Senate – would rely on information from a new state agency that would have the power to monitor the market, including forcing companies to disclose financial information and having the power to subpoena oil executives to testify.
In 10 years, the bill requires the state auditor to investigate the program to find out if it is working to reduce fuel prices. If it’s not, the auditor can order the program to shut down – but lawmakers will have six months to review that decision and reverse it if they choose.
“It is our role to protect our residents from any practices of any business that may harm them,” said state Sen. Nancy Skinner, a Democrat from Berkeley and the author of the bill.
The bill highlights the challenges of balancing the competing pressures of protecting consumers at the pump while at the same time pushing policies to end the state’s reliance on fossil fuels.
California’s climate strategy — which includes banning the sale of most new gas-powered vehicles by 2035 — would reduce demand for gasoline by 94% by 2045.
“There are consequences for doing what we are doing, and (high gas prices) are one of the consequences,” said state Sen. Kelly Seyarto, a Republican from Murrieta who opposes the bill.
California’s gasoline prices are already higher than most other states because of taxes, fees and environmental regulations. California’s gas tax is the second-highest in the country at 54 cents per gallon. And the state requires oil companies make a special blend of gasoline to sell in California that is better for the environment but is more expensive to produce.
Still, at one point during the price spike last year the average price of a gallon of gasoline in California was more than $2.60 higher than the national average — a difference regulators say is too large to be explained by taxes, fees and regulations.
Much of the oil industry’s complaints about the bill have focused on the new, independent state agency lawmakers would create create to investigate the market. Oil companies would be required to disclose massive amounts of data to this agency, giving regulators a better sense of what could be driving price spikes. And, crucially, the agency would have subpoena power to compel oil company executives to testify.
Kevin Slagle, spokesperson for the Western States Petroleum Association, said oil companies would have to report data on 15,000 transactions per day, what he called “a ridiculous level of reporting” that would drive up costs. He said the real problem with California’s gas prices are state laws and regulations that hinder the supply of fuel. He criticized Newsom and lawmakers for rushing the bill through the Legislature with little input from the oil industry.
“Why does the governor want to jam this through? Clearly it’s because the details of this are not good for California consumers,” Slagle said. “They don’t address the problem, but it provides him a political win.”
Dana Williamson, Newsom’s chief of staff, said she has repeatedly had meetings with representatives from the oil industry to discuss the bill, including meetings with specific companies and two meetings with the Western States Petroleum Association.
“It’s a ridiculous over exaggeration that they have been cut out,” Williamson said.
The Associated Press contributed to this report.
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.