Where, oh, where did the mysterious, unaccounted-for 50 cents go on the cost of fuel?
In October 2022, this was the inescapable and inexcusable battle cry of Governor Newsom, who, armed with the higher knowledge bestowed on him from the environmental community, determined that the petroleum marketers were stealing 50 cents a gallon when Californians bought liquid fuel.
Let's look at a few reasons why Californians pay more than the rest of the country.
SB 222, sponsored by Senator Scott Wiener, is California's latest attack on the petroleum industry, currently being developed in the Democratic California Legislature. This is the same body of elitists that has a Democratic supermajority, where Republicans should be treated with care because they are on the human mammal endangered species list.
SB 222 intends to hold fossil fuel companies accountable for their contributions to climate change. Proponents argue that there needs to be a mechanism for Californians to seek compensation from fossil fuel companies for misleading the public about its impacts.
A report by the Center for Jobs and the Economy indicates if this bill is passed and signed by the Governor, it could significantly increase the cost of electricity, natural gas, housing, and everyday goods, potentially burdening households with up to $6,200 in additional annual expenses. I certainly hope that the cost of frankfurters won't be affected.
In 2001, Enhanced Vapor Recovery (EVR) I began to be required. Phase I (control of vapor emissions and spills during delivery to the storage tank) required that the fuel spill buckets at gasoline dispensing facilities be upgraded to a more robust system. This provided a win/win for dispensing facilities and environmentalists. The conversion cost depended on many factors but was bearable in the average range of about $10,000 for a site.
Enhanced Vapor Recovery Phase II began to be required in 2004. EVR Phase II required control of fugitive emissions from fueling into a vehicle. This process turned out to be the most expensive requirement the California Air Resource Board (CARB) ever inflicted on the citizens of California.
To describe its effectiveness best, one only has to imagine a bazooka firing at a bug, an act of enormous overkill and the highest cost per emission reduction that CARB has perpetuated on Californians. CARB indicated that this upgrade should only cost around $40,000. Still, it quickly became apparent that CARB did not consider local permitting requirements or even ADA compliance, which ultimately drove the cost of every fueling facility (at the time, over 13,000 facilities) to somewhere between $75,000 and half a million dollars.
According to CARB, the design of EVR Phase II was to capture up to 98% of fugitive emissions, which would prove to be only 3% higher than pre-EVR systems. This cost is high for a minimal amount of capture of emission reductions, and was staggering for small fueling stations. These stations were required to spend this money regardless of the price or outcome.
CARB was always willing to apologize for their miscalculations, but as with elite environmentalists, no one was held accountable, and CARB promised not to miscalculate again.
Oh, but wait (there is more).
The CARB-approved Phase II systems are very complicated and, in many cases, require a certified technician to work on or to troubleshoot. These technicians are costly. A scheduled repair or maintenance visit can cost thousands of dollars and typically cannot be repaired or adjusted by the site owner.
Unfortunately, these mandated systems do not work well when fueling vehicles with on-board vapor recovery. And the Environmental Protection Agency began requiring Onboard Vapor Recovery (OBVR) or Onboard Refueling Vapor Recovery (ORVR) on all passenger vehicles in the late 1990s to capture vapor emissions from fueling events.
In 2012, the EPA recognized that Phase II systems had become obsolete because most vehicles on the road had been manufactured with OBVR/ORVR. However, the EPA left the future use of Phase II systems up to each state individually.
Most states abandoned Phase II systems long ago.
Not California. CARB continued to require Phase II even though the algorithm that supported their fueling data was designed and developed for vehicles without OBVR/ORVR. In fact, CARB Phase II was never intended to work well when most fueling is to vehicles with ODVR/OPVR.
For 20 years, station owners have been burdened by a system that essentially does not work. Yet CARB has continued to misinform station owners and the public on the efficiency and, ultimately, the necessity of EVR II.
According to CARB's studies, in 2014, 17% of fueling events were with vehicles without ORVR/OBVR. In 10 years, that number has been reduced substantially. CARB estimates that only 6% of vehicles fueling in 2020 were for vehicles without OBVR/ORVR. CARB further estimated that by 2028, only 2% of vehicles without OBVR/ORVR will continue to operate on California roadways.
That makes this cumbersome, irrelevant system a huge money hole which is unnecessary, based on CARB's own studies.
Unfortunately, the industry has repeatedly asked for this regulation to be suspended. CARB's response has been: this is essential to clean air — which is statistically untrue.
CARB's EVR Phase II regulations mandate the use of only CARB-certified components with a CA-certified marking on them. These components, in many cases, are the exact same parts used outside of California where they cost significantly less. CARB and Air Districts have collected tens of thousands of dollars in regulatory fines due to operators unknowingly using parts that do not have this CA-certified stamp on them.
To make this issue even more painful, the pump's hanging hardware — which consists of hoses, safety breakaways, swivels, and nozzles in a Phase II system — is at least ten times more expensive than non-Phase II hanging hardware. This means replacing these components costs more than $1,800 per hose set.
When you add up these costs by multiplying the number of hoses at a site, one will see the unnecessary, expensive, and grim reality for fuel site operators. Paying for an unnecessary system proven to fail is just one of the reasons that the Governor cannot find his mystery 50 cents.
It is time to demand that CARB allow existing systems to be decommissioned.
"Oh where, oh where has my 50 cents gone? Where, oh, where can it be? With the truth cut short and the Governor's tale so wrong, oh where, oh where, can the 50 cents be?" Governor Newsom?
Originally published in the April 2025 issue of the
O&A Marketing News.
© KAL Publications Inc. 2025