California bill penalizing oil profits makes little progress
>> 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 says 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 would be the nation’s first penalty on excessive 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.
The oil industry spent about $34 million lobbying the Legislature in the last two-year session and remains a powerful political force, particularly among Democrats who represent parts of the state where the industry provides jobs. The proposal would need support from a majority of lawmakers to pass.
The bill is a big risk for Newsom, who is seen as a possible presidential candidate ahead of 2024. Newsom has embraced electric cars, ordering state regulators to ban the sale of most new gas-powered cars by 2035. But for decades gasoline is likely to continue to be a critical commodity in California, a state that has twice as many licensed drivers as any other state.
Historically, California’s gas prices have always been higher than the rest of the country because of the state’s higher taxes and fees, and the special blend that gasoline regulators require because it is better for the environment.
But state regulators say they can’t explain recent price spikes like the one last summer that, at its peak, had some California commuters paying as much as $8 per gallon while oil companies recorded super-sized profits. Newsom’s solution is to penalize oil companies when their profits get too high, and return that money to the public.
During the bill’s first public hearing in the state Senate on Wednesday, many Democrats were sympathetic to drivers hit by price spikes. But several Democrats appeared to be skeptical.
“What the hell are the possible unintended consequences that could hurt those very people to a greater extent?” asked state Sen. Bill Dodd, a Democrat from Napa.
Dodd wanted to know what would stop oil refiners from simply shipping their product to other states in order to avoid California profits that could trigger a penalty.