What Others Are Saying

California's commitment to limiting its emission of carbon and other greenhouse gases in hopes of fighting global warming is about to get real with the adoption as soon as Thursday of a sweeping plan that might ultimately represent the biggest government intervention in the economy in the history of the state.

"This is an economy-changing plan, and it's not going to be cheap, and it's not going to be easy to accomplish," said Shelly Sullivan, executive director of the AB 32 Implementation Group, a business coalition.

"This plan is an economic train wreck waiting to happen," James Duran of the California Hispanic Chambers of Commerce told the board, saying that it would cause financial hardship to minority-owned companies.

"The economic analysis is terribly deficient in critical ways," wrote Robert Stavins, a professor at the John F. Kennedy School of Government at Harvard University.

"The net dollar cost of each of these regulations is likely to be much larger than what is reported," wrote Matthew E. Kahn, a professor at the University of California, Los Angeles.

In a unanimous decision watched closely worldwide, California's air-quality regulators yesterday adopted the nation's first comprehensive plan of attack to curb global warming.

As a result, Californians eventually could be further pinched every time they shop for groceries, write a check to the power company or make a down payment on a new car.

Catherine Reheis-Boyd, chief operating officer of the Western States Petroleum Association, said the [proposed oil severance] tax could raise energy prices and increase California's dependence on foreign oil. "You can't solve your budget crisis at the expense of your energy security," she said.

"Putting in place an oil tax of this magnitude on domestic production will lead to a decrease in domestic production because it'll make it less competitive," said Reheis-Boyd, whose organization represents oil majors Chevron Corp. (CVX), Exxon Mobil Corp. (XOM) and ConocoPhillips (COP), as well as smaller producers such as Occidental Petroleum Corp. (OXY) and Berry Petroleum Co. (BRY) and refiners and pipeline operators.

High taxes and burdensome regulations make California the second-toughest state in the nation for small businesses, with only New Jersey scoring worse in a report card issued by a national organization of entrepreneurs.

The California State Attorney General’s Office initial response to the gas price issue in Susanville is that nothing illegal is going on. “While price fixing is illegal, a prerequisite to the offense is the collusion among competitors to set prices. No such conspiracy is apparent from the facts available to us and, and indeed we have failed to find collusion among the various oil companies and/or their dealers in any previous investigations.”

The decrease in the price of crude oil is the leading reason for the decline in the price consumers pay for gasoline. Crude oil costs account for two-thirds to three-quarters of the price of a gallon of gasoline, said Tupper Hull, director of strategic communications of the Western States Petroleum Association, a trade association representing major oil companies in six Western states.

Consumers are encouraged to look for the best prices, according to Joe Sparano, president of the Western States Petroleum Association, a regional trade group for oil and gas companies based in California and five other Western states.

"That brings the whole system down. If you can find a station that's cheaper and not too far out of the way, buy it there. Buy the lowest grade your car can handle," Sparano said.

The cost of gas is soaring because of price hikes in crude oil, coupled with increased demand from industries in countries such as China and India, said Joe Sparano, president of the Western States Petroleum Association. The Sacramento-based trade association represents about 30 petroleum companies.

A barrel of crude oil cost about $109 Friday, or the equivalent of $2.60 a gallon of gas. That's before the oil is delivered to a refinery and taxes of about 47 cents a gallon are added to the price at the pump, Sparano said. "Add it all up and you end up with the market price," he said.