Hearing on Inslee plan to compel oil company price transparency gets heated

Jan 18, 2024, 1:41 AM | Updated: 9:34 am

Rain gas...

Oil companies say posted prices makes them as transparent as they need to be. (Getty Images)

(Getty Images)

The first public hearing on Washington Democratic Gov. Jay Inslee’s plan to compel oil and gas companies to be transparent with their prices was held Wednesday, prompting strong accusations by climate activists and a vigorous defense from the industry.

Senate Bill 6052 aims to address transparency issues related to petroleum supply and pricing in the state. (A PDF of the bill can be seen here.)

It establishes a division within the Utilities and Transportation Commission (UTC) to provide oversight and analysis of the transportation fuels market.

The bill requires the industry to submit monthly and quarterly reports on imports and exports of petroleum products, sales volume of fuels, and other relevant information.

The primary focus: Determining if there’s a weighted price of gas in Washington due to the governor’s Climate Commitment Act (CCA), which created “a comprehensive, market-based program to reduce carbon pollution and achieve the greenhouse gas limits set in state law,” as the Washington State Department of Ecology explains. The law significantly affects oil and gas refiners in the state.

From Kate Stone: Inslee accused of dishonesty over climate law’s impact on gas prices

‘Little insight into … the factors influencing pump prices’

“It’s a work in progress,” said Becky Kelley, the governor’s senior climate advisor to the Senate Committee on Environment, Energy, and Technology. “We have visibility and regulatory power in the electricity sector pricing, but very little insight into petroleum markets, supply, and the factors influencing pump prices.”

Democratic Sen. Joe Nguyen, the bill’s prime sponsor, presented it on behalf of the governor.

“Our goal is to shed light on the mechanisms influencing fuel prices in Washington,” Nguyen stated. “Our objective is clear – to ensure that our citizens are not subjected to unfair practices and to guarantee transparent and justifiable changes in gas prices.”

Nguyen acknowledged the high level of secrecy in the petroleum industry. The bill included confidentiality provisions submitted by oil and gas companies. However, some lawmakers and industry advocates argue that specific anti-cyberhacking provisions need to be added.

“I know that there’s some work around cybersecurity and confidentiality that we’ll need to figure out as well and that there’s a work in progress as it relates to this policy,” Nguyen said.

Committee member and Republican Sen. Drew MacEwan expressed concerns about the UTC’s expertise in determining if gas companies are guilty of price gouging.

“You have some of the best commodity traders in the world” trying to predict prices, MacEwan said.

“Oil and gas prices are extremely cyclical on the global market, and especially on a state-by-state basis. I question the feasibility of putting this in place practically when the best market makers in the world get it wrong,” MacEwan said.

Jason Lewis, representing the UTC, admitted not having all the answers to lawmakers’ questions and mentioned the need to hire experts to analyze pricing and supply information submitted by oil and gas companies.

“Leaning on expertise in the industry will be crucial,” Lewis said.

Expected opposition to the bill

All members of the petroleum industry testifying before the committee opposed the bill.

Tom Wolf, BP America’s senior government affairs manager, testified as neither for nor against the bill, stating, “The current draft does not meet the standards, and we believe the program won’t provide you with the information you’re looking for, frustrating everybody.”

Inslee on KIRO Newsradio: Governor doubles down on the Climate Commitment Act despite high gas prices

During questioning by Democratic Sen. Lisa Wellman, Wolf addressed the issue of profitability.

“How does your profitability relate to the price at the pump?” Wellman asked.

Wolf explained BP America is an integrated energy company, and various factors affect profitability. He emphasized the company doesn’t set the price at the pump, and gas stations determine the final price.

“We bring oil up from the from the earth. We market it, we refine it,” Wolf said. “We sell it at the ‘rack,’ give it to gas stations and those gas station operators and owners set the final price.  So to just do the one-on-one comparison, I don’t think is accurate.”

One of the few acknowledgments that the Climate Commitment Act (CCA) and the pollution tax are being baked into the price of gas came from Steve Snider, owner of Snider Energy.

“Our company has observed major oil company refiners adding a surcharge to cover the cost of the CCA and the Low Carbon Fuel Standard. During 2023, our company paid as much as 70 cents per gallon and CCA surcharges are currently paying approximately 50 cents per gallon CCA and LCFS fees” Snider told the committee.

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Steve Clark, president of Genesee Fuel and Heating, opposed SB 6052, claiming the petroleum business is already transparent.

“What other industry posts their prices outside their retail operations, giving consumers a choice without even getting out of their vehicle? That doesn’t happen with coffee, doughnuts, almond milk or electricity,” Clark argued. “Every single day, our consumers are holding retail gas stations accountable.”

Matt Markovich often covers the state legislature and public policy for KIRO Newsradio. You can read more of Matt’s stories here. Follow him on X, formerly known as Twitter, or email him here.

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Hearing on Inslee plan to compel oil company price transparency gets heated