California lawmakers are set to vote on a first-of-its-kind proposal that would allow penalties on oil companies for price gouging at the pump. The proposal aims to stop the kind of spikes last summer that caused some drivers to pay up to $8 per gallon as the industry reaped super-sized profits. Governor Gavin Newsom has pushed for the bill, which would limit how much money oil companies could make from selling gasoline in the state, with hefty fines imposed on anyone who went over that threshold.
The oil industry has pushed back, paying for a wave of digital ads that have labeled any potential penalty as a tax. However, they have failed to stop the bill, which is now racing through the process with the Senate vote followed by a final vote in the state Assembly likely next week.
California’s gasoline prices are already higher than most other states because of taxes, fees, and environmental regulations. California’s gas tax is the second-highest in the country at 54 cents per gallon. And the state requires oil companies to make a special blend of gasoline to sell in California that is better for the environment but is more expensive to produce.
At one point during the price spike last year, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average. This difference is too large to be explained by taxes, fees, and regulations, according to regulators.
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% by 2045.
The proposed bill is an agreement between Governor Newsom and the Democratic lawmakers who control a majority of seats in the state Legislature. However, Republicans, who don’t have enough members to block bills from passing, blasted the proposal on Thursday, calling it socialism and pushing the government to pick winners and losers.
While the potential penalty has been a focus of the oil industry's complaints, much of their opposition has been directed towards the creation of a new, independent state agency that would investigate the market. Oil companies would be required to disclose a massive amount of data to this agency, giving regulators a better sense of what could be driving price spikes. The agency would also have subpoena power to compel oil company executives to testify.
According to Kevin Slagle, spokesperson for the Western States Petroleum Association, oil companies would have to report data on 15,000 transactions per day, which he called "a ridiculous level of reporting" that would drive up costs. He criticized Newsom and lawmakers for rushing the bill through the Legislature with little input from the oil industry. Slagle believes that the real problem with California's gas prices is state laws and regulations that hinder the supply of fuel.
Dana Williamson, Newsom's chief of staff, refuted these claims and stated that she has repeatedly met with representatives from the oil industry to discuss the bill. Williamson said that she had meetings with specific companies and two meetings with the Western States Petroleum Association. She called Slagle's accusations a "ridiculous over-exaggeration" and stated that the oil industry has not been cut out of the process.
The bill will be voted on in the state Senate, followed by a final vote in the state Assembly. The California Energy Commission will decide whether to impose a penalty and what the penalty should be. Some lawmakers believe the prospect of a penalty could be enough to deter huge price increases in the future.
As the proposed bill moves through the legislative process, the outcome remains uncertain. However, if passed, it could have far-reaching implications for the oil industry and consumers in California. For further updates and details on this story and other news that affects you, visit SoCalTelevision.com. As a community reporter, Jason James will continue to bring you the latest news and developments on this issue and others that matter to you.
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