Energy & Environment

Gavin Newsom Does His Best Jimmy Carter Impression

California's governor is following Carter's disastrous energy policies at a time when the state's residents are suffering from already high prices.

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It was arguably the most politically disastrous speech from a president in the nation's history. Against a backdrop of quarter-mile-long lines at gas stations, soaring inflation, and nationwide strikes by independent truckers disgruntled by fuel prices and energy regulations, President Jimmy Carter gave what historians call his "national malaise" address.

Carter didn't actually use that term, but he prattled about Americans' "crisis of confidence" and detailed policies that helped lay the groundwork for Ronald Reagan's 1980 landslide presidential victory. The main issue centered on the grueling national energy crisis.

"I'm asking Congress to mandate, to require as a matter of law, that our nation's utility companies cut their massive use of oil by 50 percent within the next decade," he said. He demanded that Congress impose a "windfall profits tax"—a punishing tax on "excess" oil-company profits. He planned to create a new energy bureaucracy and shift the nation toward solar power.

If you're a Californian, this should sound familiar given that Gov. Gavin Newsom—who hopes to become president—is following Carter's energy playbook. Newsom was 12 when Carter gave his speech and many of the state's lawmakers weren't born yet, so perhaps they can be forgiven for not remembering that mess. But they can read about it and realize this is no model to follow.

Newsom recently announced a special session in December to deal with soaring gasoline prices. The average national price is $3.80 per gallon and $3.25 in Texas. In California, the average is $5.80 a gallon and above $8 in some areas. "Gas prices are up while oil companies rake in RECORD profits," Newsom tweeted. "We cannot continue to allow greedy oil companies to rip us off at the pump."

The legislative confab will no doubt include chest-thumping by lawmakers who refuse to realize the real cause of California's sky-high gas prices, which is our public policy. Lawmakers had proposed with Newsom's support the idea of reviving that Carter-era windfall profits tax. Only in California would lawmakers propose a new tax to bring down the price of a commodity.

Although shelved, the idea is one of the worst concepts imaginable. It lets government determine the proper level of profits that a company may earn, and then hammers them with a tax designed to punish them if they earn too much. It's an abuse of power, and it won't reduce gas prices. Quite the contrary, as it will discourage investment in oil exploration and reduce the supply of gasoline. It's essentially a price cap, and will only lead to shortages and gas lines.

"A Congressional Research Service paper found that the tax reduced domestic oil production by between 1.2 and 8 percent, and increased reliance on foreign oil by between 3 percent and 13 percent between 1980 and 1988 (when the tax was eventually repealed)," according to a Tax Foundation analysis. This is a recipe for compounding rather than solving the problem.

Lefty economists have for years complained about California's "mystery gas surcharge"—i.e., the difference between the price people in other states pay and the amount we pay here. It's not really a mystery. California has the second-highest gas taxes in the nation. Our state regulations mandate a special environmentally friendly gasoline formulation that limits our access to petroleum refined in other states and is costlier to produce.

A prominent economist says the state pays higher gas prices beyond what the state's higher taxes and regulations explain. "I'm sure they're charging more because they can. The question is, are there actual costs behind it that are justifying it?" UC Berkeley's Severin Borenstein told KGO News in San Francisco. Companies charge prices that reflect supply and demand and not what academics and bureaucrats determine to be justified. Shocking.

But why are refiners so much greedier in California than they are everywhere else? "The big problem is we have policies in place, especially in California, that make it difficult to expand supply," an economist for the Institute for Energy Research told Fox Business News. Go figure, but you get more of what you reward and less of what you punish.

Basically, Newsom and the Democratic Legislature have been waging a jeremiad against gasoline production. In 2020, Newsom signed an executive order mandating that the California Air Resources Board ban sales of new internal-combustion-engine vehicles by 2035. His administration is proud of myriad new rules that vastly limit oil and gas drilling. Like Carter, Newsom is obsessed with switching to alternative fuels.

Currently, California is struggling to keep the lights on. Truckers have protested at the Port of Oakland, thanks to a Newsom-signed law (Assembly Bill 5) that limits the owner-operator trucking model. We're experiencing a statewide malaise that's eerily reminiscent of the Carter years. All we need now are the ubiquitous 1970s bumper stickers updated to reflect the man in charge: "Newsom, Kiss My Gas."

This column was first published by The Orange County Register.