Gov. Gavin Newsom (D-CA) has signed a new bill as of Tuesday which will block oil companies from “price gouging,” stating that the new law would protect the state’s climate and drop prices.
This new piece of legislation, which was first brought to the floor by State Sen. Nancy Skinner (D-CA) near the end of last year, steps up to force oil companies to cut into their profits in order to avoid being slammed with a civil penalty from the California Energy Commission. Newsom endorsed the bill, along with the support of various climate groups and other activists.
“With this legislation, we’re ending the oil industry’s days of operating in the shadows. California took on Big Oil and won,” stated Newsom in a recent release. “We’re not only protecting families, we’re also loosening the vice grip Big Oil has had on our politics.”
This new law will permit the State Energy Resources Conservation and Development Commission the power to establish a maximum gross gasoline refining margin and establish a penalty for any refineries across the state which go past said margin.
The average gas prices for the state of California currently sit at $4.83 per gallon, as reported by data from AAA, which is 40% higher than the national average gas price of about $3.46 per gallon.
Almost immediately, Newsom saw backlash directly from the gas and oil sector in the wake of the signing. “Price caps, taxes, and tax-like penalties do not increase supply or reduce prices, but instead can have the opposite effect: less investment, less gasoline supply, and ultimately higher costs for Californians,” stated Western States Petroleum Association CEO Catherine Reheis-Boyd in a release. “With this politicized process behind us, it’s time for serious discussion about what it will take to ensure an affordable, reliable and safe fuel supply for the years ahead.”
California also currently sports the highest gas taxes in the United States: residents on average pay about $1.00 in state taxes and fees past the established federal excise tax of $0.24 cents per gallon, as reported in data from the American Petroleum Institute. Newsome has previously toss out the notion that high taxes are partially responsible for elevated fuel costs in his state.
“When gas prices started skyrocketing in August and September, our gas tax and fees hadn’t changed a single cent,” he stated in a video created to bring attention to the bill. “Our proposal includes some of the nation’s most aggressive transparency measures as well, so we can get answers and prevent it from happening again.”
