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The lieutenant governor proposes amending the state Constitution to regulate gasoline prices.

August 29, 2003|Matea Gold and Elizabeth Douglass | Times Staff Writers

SACRAMENTO — Charging that international oil companies are manipulating the gasoline market, Lt. Gov. Cruz Bustamante said Thursday that as governor he would work to bring the industry under state regulation in an effort to control gas prices.

Bustamante, who compared the behavior of oil companies to deception in the electricity industry, proposed amending the California Constitution to define gasoline as a public utility and subjecting gas prices to approval by the state Public Utilities Commission.

"With gasoline being the absolute lifeblood of most California families ... it is about time that Californians had a say in being able to make sure that they are not being gouged," the lieutenant governor said during a morning news conference outside a Sacramento gas station.

Bustamante's proposal -- which comes after he has proposed taxing corporations and the wealthy to help cover California's budget shortfall -- sets him apart from the other top candidates in the Oct. 7 recall election, who have complained about excessive state regulation.

Although Bustamante is running a campaign urging people to vote both against the recall and for his candidacy, his policy proposals also hint that he would have a different approach in office than Gov. Gray Davis, who has not endorsed the large tax hikes Bustamante says are necessary.

On Thursday, Davis said he was in favor of reining in gas prices, but added that the state may not have the authority to oversee the gasoline industry.

"I want to look at this specific proposal to make sure it's actually workable," the governor said during a news conference in Sacramento.

Hawaii approved a price cap on gasoline that is set to take effect in July, but no state regulates the oil industry as Bustamante proposes. Oil companies would likely challenge the new law as a violation of the commerce clause of the U.S. Constitution.

"Gasoline -- and the business of selling gasoline -- is part of interstate commerce that belongs to Congress to regulate, if at all," said Anthony Sabino, an associate law professor at St. John's University's Peter J. Tobin College of Business in New York. "With all due respect to Mr. Bustamante, he is either very ignorant of the law, or he's getting incredibly bad advice from his advisors, or it's a publicity stunt."

Amending the state Constitution would require the approval of two-thirds of the Legislature. State Sen. Joe Dunn (D-Santa Ana), who introduced the constitutional amendment as a bill Thursday, acknowledged that approval was unlikely but said proponents would take the measure to voters as an initiative if it fails in Sacramento.

"Gasoline has reached such a high level of importance in society

Loretta Lynch, a member of the California Public Utilities Commission, applauded Bustamante's proposal and said she saw no legal obstacles to the PUC regulating gasoline prices.

"I think it's a bold move whose time has come," she said.

California is the nation's largest -- and most profitable -- market for gasoline. Motorists here routinely pay pump prices that are 20 cents to 40 cents a gallon above the national average.

This week, the state is in the throes of its second spike in gasoline prices since January. The statewide cost of a gallon of regular gas averaged $2.101 on Monday, up 36 cents in 14 days, according to a federal survey. The record high, $2.145 cents a gallon, came on March 17.

Gasoline market analysts say the higher prices reflect California's unique fuel blend, the tight balance between gasoline supply and demand, and the fact that a handful of major oil companies produce and sell most of the state's gasoline.

Jeffrey Wilson, spokesman for the Western States Petroleum Assn., an industry trade group, rejected the notion that government intervention would benefit consumers.

"The cause of price volatility in California has nothing to do with who produces the gas, who sells the gas, or which government agency oversees those functions," he said. "It has everything to do with the fact that the demand for gasoline in our state is growing at a much faster rate than our ability to increase supply."

He said Bustamante is the latest in a string of politicians to try to legislate the gasoline market in California.

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