BILL ANALYSIS �
SB 448
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Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 448 (Leno) - As Amended: August 5, 2013
Policy Committee:
TransportationVote:10-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Energy Commission (CEC) to
investigate whether price manipulation of gasoline or diesel
fuel has occurred. Specifically, this bill:
1)Requires the CEC to:
a) Identify, in consultation with relevant state and
federal agencies, data currently collected or developed by
the commission that is important for determining whether
improper fuel price manipulation has occurred or is
occurring,
b) Develop an analytical methodology for evaluating whether
price manipulation has occurred or is occurring.
c) Identify data not in possession of the commission
determined to be important for determining whether price
manipulation has occurred.
d) Include in the biennial integrated energy policy report,
following consultation with the Air Resources Board and
other relevant state agencies, recommendations to limit
price volatility and comparative price increases in the
state's fuel market, including an evaluation of specified
strategies for reducing fuel price volatility.
2)Stipulates that the above shall be implemented upon
appropriation of state funds generated by royalty payments
from oil and gas leases.
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FISCAL EFFECT
Subject to appropriation, the CEC would incur the following
General Fund costs:
1)One-time costs of around $600,000 for one position ($100,000)
to develop the analytical methodology and $500,000 in
contracts to obtain information on industry cost structures
and to develop market tracking systems to monitor thousands of
daily transactions.
2)Ongoing costs of $875,000 for the following:
a) One position ($100,000) to determine whether additional
data is required, and if so, to obtain and manage this data
continuously.
b) Two positions ($250,000) and contract support ($350,000)
to update and verify changes in industry cost structures
and changes in market transactions.
c) One position ($125,000) data and investigate potential
market manipulation, assuming four to six such incidents of
annually.
d) $50,000 in legal support for the above activities.
COMMENTS
1)Background . Under the Petroleum Industry Information Reporting
Act of 1980 (PIIRA), the CEC is required to monitor gasoline
pricing and report on price volatility. In this regard the
commission gathers, analyzes, and interprets data from
refiners, major marketers, oil transporters, major oil
storagers, and major oil producers for issues including: (a)
the nature, cause, and extent of any petroleum products
shortage; (b) significant changes in prices for petroleum
products and the reason for those changes; (c) the profits of
the industry as a whole; and (d) the emerging trends related
to supply, demand, and conservation of petroleum and petroleum
products.
2)Purpose . This bill requires CEC to expand their information
data collection relative to the PIIRA to include investigation
of whether fuel price manipulation has occurred. The author
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has introduced this bill as recent spikes in gasoline and
diesel prices have renewed concerns regarding potential market
manipulation by gas companies. His intention is to give
California the tools to ensure that major oil companies are
not violating the law through concentration of market power
and fuel market price manipulation.
3)Opposition . The Western State Petroleum Association (WPSA)
argues that the bill is duplicative of current state and
federal oversight of fuel markets. WPSA also contends that any
comparative analysis of fuel market differences with other
states should consider the impact of policies unique to
California, including reformulated gasoline regulations, the
low carbon fuel standard, and AB 32 requirements.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081