SACRAMENTO — California Governor Gavin Newsom and State Senator Nancy Skinner (D) have unveiled a proposed price gouging penalty on what they call oil companies’ “excess profits” to deter excessive price increases. The move follows “unexplained gas price hikes that led to record profits for Big Oil,” they said. “Excessive” refiner margins would be punishable by a civil penalty from the California Energy Commission (CEC), they said.
Newsom called a special session of the California Legislature to pass a price gouging penalty. The legislature will also consider efforts to empower state agencies to more closely review gas costs, profits and pricing, as well as provide the state with greater regulatory oversight of the refining, distribution and retailing segments of the gasoline market in the state.
- Click here to view the proposed legislation.
“California’s price gouging penalty is simple—either Big Oil reins in the profits and prices, or they’ll pay a penalty,” said Newsom. “Big Oil has been lying and gouging Californians to line their own pockets long enough. I look forward to the work ahead with our partners in the legislature to get this done.”
Skinner added, “No one can deny that California’s gas prices were outrageously high compared to other states.”
The amount of the maximum margin and the amount of the penalty will be determined through the legislative process, the said. Any penalties collected by the penalty will go to a Price Gouging Penalty Fund and then given back to Californians, Newsom and Skinner said.
The proposal also improves transparency and oversight of the oil industry by the state, expanding the CEC and the California Department of Tax and Fee Administration’s ability to investigate and obtain information on costs, profits and pricing so that the state can better address the causes of pricing irregularities and minimize the likelihood of future supply or price shocks.
“Whatever Gov. Newsom wants to call it, this is a tax and it’s going to have the same impact that all taxes do on consumers, and that is to raises costs, not bring them down,” Kevin Slagle, spokesperson for the Western States Petroleum Association, told the Associated Press. “We think the governor should be honest about what this is and let the legislators vote on a tax and sell it to the California public as a tax and see how people feel about it.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.