Bills Seek to Lower Pump Prices After Spring’s Rising Gas Costs

Last spring, when gasoline prices shot up more than 20 cents a gallon, state Sens. Quentin Kopp (I-San Francisco) and Steve Peace (D-El Cajon) held hearings to find out why.

What emerged was a concern that consumers might be paying more than necessary in some cases because of restrictions on where franchise service stations, which account for the majority of stations statewide, can buy their gas. Both senators now have bills moving through the Legislature aimed at easing those restrictions.

Sponsored by the California Service Station and Automotive Repair Assn., the bills would let California’s franchise station owners shop around the state for the best wholesale price on their brand of gasoline and limit the number of oil company-owned stations.

Most stations are required by contracts to purchase gas from oil companies at assigned wholesale outlets. The problem, say station owners, is that the oil companies set their prices at varying rates depending on the region in which the gas is sold.

Peace’s SB 404 would allow franchise gas stations to buy their brand of gas from any wholesale vendor in the state, including independent contractors who often purchase the gas from oil companies at a cost several cents per gallon cheaper than what service stations pay. The service station owners argue that if they had the freedom to buy gas from the cheapest vendor, they would be able to pass the savings on to consumers.

Lobbyists for the oil industry, which opposes the bills, argue that prices could actually increase in some areas if oil companies leveled off wholesale prices throughout the state. They also say changing their contractual relationships with dealers could force gas prices higher because the current system is aimed at ensuring franchise stations a regular supply of gasoline.

Kopp’s SB 52 would allow for more limited shopping but would restrict the competition from oil company-owned and -operated service stations--about 12% of California’s gas stations--by allowing no more than a 5% increase in the number of company-owned stations over the next three years.

Although Kopp’s bill claims to guarantee competition, oil company lobbyists say the bill may have the opposite effect.

“For some unjustified reason, [Kopp] believes the company stations are bad and should be limited,” said John Geoghegan, a lobbyist for Western States Petroleum Assn. “But in states where company stations have been restricted, there have been fewer stations, shorter hours and less competition.”

Both bills, which were narrowly passed by legislative policy committees, are scheduled for votes on the Senate floor in June.

HOT BILLS

* Nursing Home Reform

Bottom line: Advocates for nursing home patients want to increase the fines levied when state inspectors cite homes for violations and make it harder for nursing homes to have low-level citations waived.

Chances: There’s massive opposition to this bill by the nursing home industry. Its $1.7-million price tag for increased regulation puts the bill’s future in serious doubt.

Next step: Second hearing today, Assembly Appropriations Committee.

Details: AB 1133 author Martin Gallegos (D-Baldwin Park) can be reached at (916) 445-7610.

* Child Care Unemployment Benefits

Bottom line: Labor leaders want unemployment benefits for those who quit jobs because they can’t find child care or because of excess overtime.

Chances: Despite opposition by business interests, the bill cleared the Senate on Wednesday on a 21-15 vote, the bare majority needed to pass the 40-member Senate. Prospects look good in the more liberal Assembly, but the bill is a likely candidate for a gubernatorial veto.

Next step: Assembly hearing, no date scheduled.

Details: SB 233 author Hilda Solis (D-El Monte) can be reached at (916) 445-1418.

Please send Capitol Matters comments via e-mail to cyndia.zwahlen@latimes.com.