It wasn’t difficult to identify a central theme as the California state legislature reconvened for a new session late last year.
“Assembly Speaker Robert Rivas kicked off this legislative session with a blistering indictment of his party’s failures on a central issue: combating the soaring cost of living in California.”
For his part, Senate President Pro Tem Mike McGuire vowed to “double down on our efforts to make life more affordable and livable.”
But evidently some in Sacramento haven’t gotten the memo.
Following devastating wildfires in the Los Angeles area, State Sen. Scott Wiener (D-San Francisco) introduced a bill to allow residents – and possibly require the California FAIR Plan, which provides fire coverage for high-risk properties when insurance companies will not – to sue oil companies for damages related to extreme weather.
Wiener argues that “containing costs” related to such disasters is “critical … to the future of our state.” And he’s not wrong. But the senator fails to consider how erroneously requiring producers of critical energy supplies to cover trillions of dollars in damages might impact the overall economy.
As a California Business Roundtable analysis of the proposal notes:
“[SB 222] places an extraordinary legal and financial burden on businesses across industries, threatening economic stability in California … SB 222 will significantly increase the cost of living in California by raising prices on fuel, electricity, natural gas, housing, and everyday goods.”
Under SB 222, the Business Roundtable found that gas prices could jump 63%, home natural gas costs could increase 76%, and residential electricity rates – already a key cost concern for legislators – could rise 31%. Overall, households could see $6,200 in extra costs as the impact of SB 222 ripples across the economy, making food, transportation, and consumer goods more expensive.
A separate proposal – SB 684 – would similarly require oil companies to pay for climate damages and, one would assume, similarly drive up costs throughout the economy. After all, it would be complete fallacy to pretend that massive shifts of liability onto the energy sector wouldn’t have enormous economic repercussions.
Of course, this isn’t the first time California policymakers have failed to see the larger impacts of their anti-oil policies.
Under Governor Newsom, California has moved aggressively to shut down in-state oil production. The result? Refineries have been forced to increasingly rely on waterborne imports of oil that analysts say are more expensive, driving up California’s already-high gasoline prices.
Anti-oil showmanship may make for good politics, but California is still overwhelmingly powered by oil and gas, and will continue to be for decades. Forcing oil companies to cover damages from extreme weather will increase their costs – and, in turn, push prices higher across the economy.
If Sacramento is serious about affordability – and specifically energy affordability – legislators have no choice but to reject SB 222 and SB 684.
