California Considers Penalties for Big Oil Profits

SACRAMENTO, Calif. (AP) — California posted huge profits as the industry rebounded after gas prices hit record highs over the summer in the most populous state in the United States. It could be the first state to fine a big oil company for raising it too high.

Legislative Gov. Gavin Newsom and his Democratic supporters put forward the proposal Monday as lawmakers returned to the Sacramento state capitol for the start of a special legislative session focused solely on the oil industry.

But the proposal lacked important details, such as how much profit would be too much for the oil companies and the fines they would have to pay if they exceeded it. Newsom’s office said those details would be sorted out later, after negotiations with lawmakers.

Gas prices are consistently high in California due to taxes, fees, and environmental regulations not found in other states. But the average price of a gallon of gasoline in California in October was more than $2.60 higher than the national average, the widest difference ever.

Newsom said there is no good way to justify it.

Newsom likened the oil companies’ actions to Gougers’ pricing to charge more for hand sanitizer during a pandemic, Newsom told reporters. He said the purpose of the penalty was to prevent a similar surge in gas prices in the future and that it was a “proactive effort to change behaviour.”

“We’re burning out. We’re suffocating. We’re getting hot because of these people,” Newsom said, referring to the oil industry and its impact on the environment. “And people can barely pay their bills because of these people.”

This could be a popular proposition among voters, who have paid an average of more than $6 per gallon of gas over the years. But that doesn’t mean it will be easy for the oil industry to get through state legislatures, where he is one of the top consumers for both lobbyists and campaign donors.

Importantly, the proposal classifies fines as “civil penalties” rather than taxes. That means only a simple majority would be needed for passage, not his two-thirds majority needed to raise taxes.

“Whatever Governor Newsom wants to call it, this is a tax, and it will have the same impact that all taxes have on consumers: not lower costs, but higher costs.” U.S. Oil Association. “I think the governor should be honest about what this is, let legislators vote on the tax, sell it to the general public in California as a tax, and see how people feel about it.”

The California Legislature typically meets in session most years to consider hundreds of bills. The governor may call legislators for a special session limited to discussion of issues specified by the governor. Newsom said it had convened a special session on gas prices as it would help parliament focus on the issue.

But legislative leaders are in no rush to pass legislation. Lawmakers convened in a special session of just a few minutes on Monday, long enough to adopt rules and appoint leaders. They won’t convene again until January.

Many lawmakers said they were unsure of what Newsom was proposing. Several senators attended Newsom’s press conference outside the Senate floor only to hear him speak.

“I don’t think anyone would object that[the oil companies]have a profitable business model, but the extent to which they are taking advantage of people seems really unfair,” Ben said. Senator Allen said. A Democrat from Santa Monica who has expressed his general support for Newsome’s initiative.

Republicans, who do not have enough votes to influence legislation, condemned the proposal.

Republican leader James Gallagher said, “The last thing we want to do is add to the burden on Californians who already pay so much.”

Adding to the uncertainty is the disproportionate number of newly elected MPs seeking seats for the first time. About a quarter of her 120 members of the state legislature are newcomers, and two head-to-head battles are yet to be resolved.

Among the new state senators is Angelique Ashby, a Democrat who was narrowly elected after a hard-fought campaign. The oil industry spent hundreds of thousands of dollars on radio and television advertising endorsing Ashby’s campaign. This trend was noted by critics who tried to use it against Ashby.

Ashby said he had not been asked by oil industry lobbyists or others how he would vote on potential penalties. She pointed out that the oil industry used the money as “independent spending.”

Ashby, who belongs to a district that includes Sacramento, said, “My opposition campaign slogans and strategies are a thing of the past.” I will make a decision.”

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Sophie Austin is a member of the Associated Press/Reports for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to cover hidden issues. Follow Austin on Twitter: @sophieadanna