California bill would authorize fines for oil companies that cut prices
California lawmakers on Monday approved the nation’s first penalty for price-cutting at the pump, voting to give regulators the power to punish oil companies for profiting from the pump. The kind of gas price hike that plagued the nation’s most populous state last summer.
Democrats in charge of the state Legislature worked quickly to pass the bill on Monday, just a week after it was introduced. It’s been an unusually quick process for a contentious issue, especially one opposed by the powerful oil industry that has spent millions of dollars to stop it.
Democratic Governor Gavin Newsom used his political might to pass the bill, which stemmed from his call last December for a special legislative session to pass. a new tax on oil company profits after the average gas price in California hit a record high of $6.44 a gallon, according to AAA. Taking on the oil industry is a major policy priority for Newsom, who is seen by many as a future presidential candidate.
Newsom told reporters after the vote: “When you take in big oil, they usually take you away – which is exactly what they have done with consumers for years and years to come. “The Legislature had the courage, conviction and backbone to fight big oil.”
He is expected to sign the bill into law on Tuesday.
Legislative leaders rejected his initial call for a new tax because they feared it could reduce supply and lead to higher prices.
Instead, Newsom and lawmakers agreed to let the California Energy Commission decide whether to penalize oil companies for price-cutting. But the crux of the bill is not a potential penalty. Instead, a series of new information will be required that oil companies disclose to state regulators about their prices.
Companies will report this information, most of which is kept secret, to a new state agency empowered to monitor and investigate the petroleum market and subpoena company executives. oil company. The commission will rely on the work of the agency, plus a panel of experts, to decide whether to impose a penalty on oil company profits and how much it should be.
MP Rebecca Bauer said: “If we were to force people to give out this information, I really don’t believe we would need a penalty because the fact that they have to tell us what’s going on will prevent they extort our consumers. Kahan, a Democrat from Orinda.
Gasoline prices in California are consistently higher than in the rest of the country because of state taxes and regulations. California has the second-highest gas tax in the country at 54 cents per gallon. And it requires a special gasoline blend that is better for the environment but more expensive to produce.
But state regulators say those taxes and fees aren’t enough to explain last summer, when the average cost of a gallon of gas in California was $2.60 higher than the national average.
“There is really no other explanation for these historically high prices other than greed,” said MP Pilar Schiavo, a Democrat from Chatsworth. “The problem is that we don’t have the necessary information to prove this and we don’t have the ability to punish the kind of historic price cut we saw last year.”
The oil industry posted huge profits last year, after years of heavy losses during the pandemic as more people stayed at home and fewer people went out.
Eloy Garcia, a lobbyist for the Western States Petroleum Association, said California’s high gas prices are the result of decades of public policy decisions that have made the state an island in the gas market. global oil and caused many refineries to leave the state. He noted that California does not have an oil pipeline into the state, meaning it has to transport what it cannot produce on its own from the ocean, which takes longer and costs more.
“We are not like Texas. We are not like Louisiana. Garcia said. “We don’t have an alternative fuel supply. We chose to do that. We have been setting our own public policy for 30 years.”
Garcia said Monday’s vote “sends a clear signal not to invest in California.”
Lauren Sanchez, Governor Gavin Newsom’s senior climate adviser, said the state has plenty of supply, noting that California refineries exported 12% of their products to other states last year. .
“We are also the third largest petroleum market in the world for these companies,” she said.