Slow going for oil profits plan
California governor’s quest for windfall fee sits in Legislature
SACRAMENTO, Calif. — After gas prices in California spiked to more than $6.40 per gallon last summer, Gov. Gavin Newsom led a charge against an industry he said is “ripping you off.”
Months later, it’s not clear if California’s Legislature is following him.
Newsom, a Democrat, called lawmakers into a rare special session in December to pass what could be the nation’s first penalty on oil company profits. But the bill is still sitting in the Democratic- controlled Legislature three months later, with no details on how much the penalty would be or when oil companies would have to pay it. Newsom and legislative leaders have been meeting privately to negotiate the terms.
The plan, which would broadly apply a fee to oil company profits in excess of a certain amount, will get its first public hearing Wednesday in the state Senate.
The informational-only hearing will include testimony from the Newsom administration, environmental advocates and an oil industry trade group.
“I’m expecting forward progress of some kind,” said Jamie Court, president of Consumer Watchdog, a nonprofit group that Newsom has cited when criticizing oil companies.
But other environmental advocates don’t have high hopes for the hearing. Four of the witnesses scheduled to speak have ties to the oil industry, according to Elected Officials to Protect America.
“The public hearing is stacked with people who have questionable ties with the fossil fuel industry in order to sway opinion,” said Heidi Harmon, co-chair of the group’s leadership council and former San Luis Obispo mayor. “This is against the principles of our democratic system.”
Newsom said the reason it’s taking so long to advance the bill is a “lack of transparency” from the big five oil refiners.
Those companies — Valero, Phillips 66, PBF Energy, Marathon and Chevron — have declined to testify during public hearings.
The big question is how much profit would trigger the penalty. Consumer Watchdog wants that threshold to be anytime oil company profits exceed 50 cents per gallon.
In the past 20 years, the big five oil refiners have average profits of 32 cents per gallon, Court said. The group reports taht all of the big five refiners surpassed 50 cents in 2022. If that threshold had been law in 2022, Consumer Watchdog said it would have generated $3.3 billion in penalties.