Sputtering out: Push for state gas price transparency fails in legislature

Feb 8, 2024, 4:02 AM | Updated: 11:42 am

gas price transparency...

A customer pumps gas at an Exxon gas station (Photo: Marta Lavandier/AP)

(Photo: Marta Lavandier/AP)

A bill that would have demanded more pricing transparency from oil companies is effectively dead in the legislature.

Senate Bill 6052 would have forced oil companies to disclose data on their profit margins and how much they make per gallon of gas in Washington, starting in 2026. It would have also created a state division within the Utilities and Transportation Commission (UTC) tasked with monitoring gas prices and determining whether fuel suppliers were unfairly manipulating the market. (A PDF of the bill can be viewed here.)

“We have visibility into electric sector pricing, but little transparency into what determines what we pay at the pump, and the reason that prices swing wildly,” Becky Kelley, a senior climate advisor for Gov. Jay Inslee testified to lawmakers in support of the bill.

The governor made the legislation a priority for his final year in office.

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“We will introduce bills forcing them to show us their books in total,” he told reporters last July, as average statewide fuel prices shot above $5 per gallon.

When Inslee unveiled his legislative climate agenda in December, that issue was front and center.

“Oil companies need to be held to account,” he told KIRO Newsradio. “We need to get a transparent review of that behavior and find out why Washingtonians are having to pay so much relative to other states.”

Sen. Joe Nguyễn, D-White Center, and a group of fellow Democrats spearheaded the push in Olympia, using a bill passed last year in California as a model.

“We’ve got to have accountability and transparency in our gas prices,” Nguyễn said in a statement. “If Big Oil is taking advantage of Washingtonians, they’ll be in big trouble.”

Bill runs out of gas in Senate

The measure stalled out after a Senate Ways and Means Committee hearing last week. Chief among the concerns: a nearly $16 million cost to set up, staff and operate the new oversight division over a two-year period. That estimate jumped to $29 million over four years.

The Western States Petroleum Association, which opposes the bill, flagged cybersecurity as another problem.

“Gathering highly confidential data from the companies, if it were released, puts consumers at risk with that information be released as well,” lobbyist Greg Hanon said.

He also argued the new proposed oversight division with broad investigative powers already exists in the Washington State Office of the Attorney General.

Hanon pointed to a 2008 study from the attorney general’s office which found, “variations in gas prices across Washington communities are due to the cost of obtaining and transporting fuel to stations and local competition, not illegal price manipulation.”

He told lawmakers that updating that study would be a “much more financially efficient way to address the issues of the committee has raised, with much more substantive responses.”

No clear answer on high fuel costs

Washington has had some of the highest gas prices in the nation for decades, without clear transparency as to why. While Democrats blame price gouging, critics of the state’s Climate Commitment Act (CCA)— championed by Inslee— say it’s the real factor behind high fuel costs. They point specifically to the law’s cap-and-trade carbon market — claiming oil companies are passing on to consumers the increased costs of complying with the program.

It’s a claim Inslee has repeatedly denied.

“No, they’re not passing on!” he insisted. “This is profit on top of everything.”

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But reports from the California Energy Commission tell a different story. The agency has collected data for the last six months since passing its own version of the gas price transparency legislation.

While the California policy is not identical to Washington’s bill, the numbers show the average profit margin for fuel suppliers over a six-month period was 11 cents — while the impact from government taxes, fees and climate program costs was over a dollar. The latest data indicates oil companies in the Golden State are now losing money per gallon.

It’s a result critics of the bill believe will play out in Washington.

“We told you that cap and trade was going to increase the cost of gasoline,” Jeffrey Pack, who is with the group Washington Citizens Against Unfair Taxes, testified. “I listened to the governor sit back and blame the oil companies for the high cost. That’s not it. It’s your actions that are doing it.”

There is a general consensus that multiple factors play a role in Washington’s gas prices at any given time, including inflation; supply and demand; the Pacific Northwest’s geographic distance from crude oil pipelines; and the state’s gas tax, which is the third highest in the U.S.

While estimates vary, as previously reported by KIRO Newsradio, roughly 50 cents of Washington’s current gas prices can be attributed to the CCA. Those estimates come from multiple nonpartisan expert analyses including one from the Oil Price Information Service, a Dow Jones company that collects fuel-pricing information for AAA and other clients.

More on the impact on consumers: State officials spar over impact of climate act on gas prices as drivers pay up

In 2023, the CCA’s cap-and-invest auctions raised a higher-than-expected $1.8 billion in revenue. The money has so far gone towards electric school buses, free public transit for youth, air quality monitoring, and electric vehicle chargers. Lawmakers are continuing to discuss how to spend the excess funds during this session.

Protections at the pump for customers

“We knew a proposal like this would be a heavy lift for a short session, especially with the expense of setting up new state infrastructure for this,” Mike Faulk, Inslee’s deputy communications director, said regarding SB 6052’s failure to make it out of committee. “Even as gas prices in Washington have dropped to almost their lowest in two years, consumers will continue experiencing dramatic price swings.”

Another of Inslee’s climate priorities, Senate Bill 6058, is moving forward. The bill would make it easier to merge Washington’s carbon market with those in California and Quebec. The governor has additionally proposed using some of the CCA’s cap-and-trade revenue to provide low- and moderate-income families a one-time $200 credit for their home electricity bills. That measure is tied to the budget bill which has yet to be passed.

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Faulk said the administration will continue watching California’s efforts and figuring out an approach that could work here in Washington.

“As we make the transition to clean fuels, transparency into oil pricing will only become more important for protecting consumers,” Faulk added.

But looming in the shadows is citizen-led Initiative 2117, which is likely headed for the November ballot. Led by conservative activist group Let’s Go Washington and signed by more than 400,000 voters, it would erase the two-year-old CCA entirely — making any potential future adjustments to the law a moot point.

You can read more of Kate Stone’s stories here. Follow Kate on X, formerly known as Twitter, or email her here.

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Sputtering out: Push for state gas price transparency fails in legislature