Is Big Oil going to push gas prices up before the election? Gavin Newsom says yes

Gov. Gavin Newsom had a dire warning for California this week: “Big oil companies are in cahoots with Donald Trump pushing prices even higher during election season.”

But gasoline prices have been stable in recent weeks in the state and nationwide. In fact, prices at the pump are well below levels of a year ago. And there’s no evidence that oil companies have engaged in any such quick price adjustments just before an election this month, or for that matter in this century.

Still, the oil industry could have some clout.

“I certainly wouldn’t rule out the possibility that the major refiners in California have some market power and could tighten up the California gasoline market to apply political pressure,” said Severin Borenstein, an energy economist at University of California, Berkeley.

The industry may have an incentive to affect a political race, even if it means being briefly unprofitable, “but I have not seen any evidence that they are adjusting to supply to try to affect the elections,” he said.

Gasoline pricing is a mix of many factors, including supply and demand, international policies, marketing costs and more.

“Oil companies have very little control just like a president doesn’t have any control. It’s all market based,” said Patrick De Haan, head of petroleum analyst at GasBuddy, which tracks gasoline prices.

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Newsom vs. Big Oil

Among the reasons for Newsom’s ire with oil companies is a report that in April, Trump met with oil executives at Mar-a-Lago.

The Republican presidential nominee said he could loosen environmental regulations and lower taxes if elected, but asked that they help him raise $1 billion. So far, donations from the oil and gas industry have apparently been nowhere near that amount.

The industry is adamant that it is not trying to manipulate prices and is not using price adjustments for political gain.

“These politically charged claims lack any basis in reality. Instead of shifting the blame, the governor should take a hard look at his own extreme policies and the impact they are having on Californians that deserve access to affordable, reliable energy.” said Scott Lauermann, spokesperson at the American Petroleum Institute, which represents the oil and gas industry.

Newsom signed legislation this week giving state regulators more ability to oversee refinery operations. The bill could result in requiring oil companies to maintain minimum amounts of refined product, which in theory could keep prices more stable.

Newsom went further in his press conference comments and on X.

“Big Oil wants to scare you into voting for@realDonaldTrump,” he tweeted. “California just passed a bill cracking down on a scheme oil companies use to jack up gas prices before the election. Don’t fall for their dirty lies.”

The tweet also featured a one-minute cartoon dramatizing Newsom’s fight against the oil companies.

Asked for evidence that companies are driving up election season prices, Newsom’s campaign team sent a previously released statement explaining that help for consumers is on the way.

Because of his initiatives, Newsom said in the statement, ‘We now have the tools to see where this market is broken. We can see how refiners that go offline for maintenance without adequately preparing for it limit supply and drive up prices.

“We can see the unusual spot market transactions that create unexplained spikes in prices that Californians pay at the pump,” he said.

Big Oil and Politics

Oil and gas companies contribute far more to Republican and conservative causes than they do to Democrats.

“This sector regularly pumps the vast majority of its campaign contributions into Republican coffers. Even as other traditionally GOP-inclined industries have shifted somewhat to the left, this sector has remained rock-solid red,” said an analysis from OpenSecrets, a nonpartisan research group that studies campaign finance.

So far in the 2024 election cycle, oil and gas interests have given $47.7 million to Republican interests and $6.3 million to GOP interests.

But none of that means oil companies are suddenly raising prices–or would even if they could easily do so.

“The price of oil depends on global supply and demand,” said Sung Won Sohn, president of Los Angeles-based SS Economics, a consulting firm.

There are other variables that affect gasoline prices. California gasoline prices have been the nation’s highest largely because of tougher environmental regulations and limited refinery capacity. And, Sohn, said, “at the consumer level, gas prices vary significantly from station to station.”

Gasoline prices have been dropping fairly steadily in California and across the nation since their June 2022 peak.

Nationally, the average price of a gallon of regular gasoline Thursday was $3.20. That’s roughly the same price as last week and last month, and down 38 cents from a year ago, according to AAA.

In California, the average Thursday was $4.66, down one cent from last week and 12 cents from a month ago. A year ago, the average was $5.59.

The biggest October price spike since 2000 came in 2004, when the average price jumped from $2.20 in California at the start of the month to $2.39 by the end. That year, President George W. Bush, a Republican, easily won re-election.

The average also went up in October 2016, from $2.81 to $2.82, as Trump won.

The price went down or was stable in Octobers of 2008,, 2012 and 2020, when Democrats won the White House.