BILL TO PUNISH OIL COMPANIES ADVANCES
A first-in-the-nation bill to punish oil companies for profiting from price spikes at the pump breezed through the California Senate on Thursday at the urging of Democratic Gov. Gavin Newsom, the first major vote in an effort to pass the law by month’s end.
The proposal is in response to sales last summer, when the average price of a gallon of gasoline in California soared to a record high $6.44. Drivers in some places paid as much as $8 per gallon, prompting widespread outrage in an election year.
Newsom, a Democrat seen as a possible presidential candidate beyond 2024, reacted by attacking the oil industry, specifically the five companies that provide 97 percent of gasoline in the state. He asked the Democratic-controlled state Legislature to pass a new tax on oil company profits, arguing it would protect consumers by preventing price spikes.
That idea went nowhere in the Legislature, as lawmakers feared it would create chaos in the petroleum market and cause companies to make less gasoline, thus increasing prices.
Instead, lawmakers and Newsom settled on a bill that would let the California Energy Commission decide whether to impose civil penalties on oil companies for price gouging. The commission — a five-member panel appointed by the governor with the consent of the Senate — would rely on information from a new state agency that would have the power to monitor the market, including forcing companies to disclose financial information and having the power to subpoena oil executives to testify.
In 10 years, the bill requires the state auditor to investigate the program to find out if it is working to reduce gas prices. If it’s not, the auditor can order the program to shut down — but lawmakers will have six months to review that decision and reverse it if they choose.
“It is our role to protect our residents from any practices of any business that may harm them,” said state Sen. Nancy Skinner, a Democrat from Berkeley and the author of the bill.
The bill highlights the challenges of balancing the competing pressures of protecting consumers at the pump while at the same time pushing policies to end the state’s reliance on fossil fuels. California’s climate strategy — which includes banning the sale of most new gas-powered cars by 2035 — would reduce demand for gasoline by 94 percent by 2045.
California’s gasoline prices are already higher than most other states because of taxes, fees and environmental regulations. At one point last year, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average — a difference regulators say is too large to be explained by taxes, fees and regulations.