Penalizing Oil Companies For Price Gouging
Sonora, CA — California lawmakers yesterday voted to give regulators the power to penalize oil companies for price gouging at the pumps.
This is the nation’s first gas penalty for oil companies that profited from this type of fuel price spike that hit the state last summer, and the oil industry spent millions trying to stop it. The Senate approved the bill last week, arguing taxes and fees were not enough to explain why the pump prices were $2.60 higher than the national average, as detailed here. As California gas prices hit a high of $6.44 per gallon in some areas of the state, Gov. Gavin Newsom made the oil industry’s alleged price gouging a top policy priority.
“When you take on big oil, they usually roll you — that’s exactly what they’ve been doing to consumers for years and years and years,” Newsom told reporters after the vote. “The Legislature had the courage, conviction, and backbone to stand up to big oil.”
Originally, Newsom called for a new tax on the oil industry if it spiked pump prices, but legislative leaders rejected that, fearing it could discourage supply and lead to higher prices.
This new bill, now approved by the state assembly, gives the California Energy Commission the power to penalize oil companies for price gouging by requiring them to provide new information about their pricing. Most of that data would be kept confidential and used to monitor and investigate the petroleum market. It also allows for subpoenaing oil company executives.
Additionally, oil companies recorded huge profits last year. Industry officials say this new bill will drive up costs and cause fuel shortages. Newsom’s office countered that the state has plenty of supply, noting California oil refineries exported 12% of their product to other states last year and is the third-largest gasoline market in the world for these companies.
Newsom is expected to sign the bill into law on Tuesday.