A flurry of votes in Sacramento: California passes gasoline price-gouging penalty bill

Advocates from the Last Chance Alliance protested the increase in oil drilling permits in California. Photo by Dan Bacher.

By Dan Bacher

Despite Big Oil spending more than $34.2 million to lobby the Legislature in the last two years – and millions more over the last three months – a bill backed by Governor Gavin Newsom to create a new state watchdog for stopping price-gouging at the pump triumphed in the California Assembly by a vote of 52 to 19 on Monday. It had already passed the State Senate days before.

The bill is now awaiting the Governor’s signature

Although the bill doesn’t authorize the tax on massive oil windfall profits that was originally envisioned, Consumer Watchdog and other advocates call it a “landmark measure” to rein in crushing California gasoline prices in the future.

Authored by Senator Nancy Skinner (D-Berkeley) and co-sponsored by Attorney General Rob Bonta, the measure creates “a dedicated, 24/7 independent watchdog” to root out price-gouging by oil companies, as well as authorizes a penalty for price-gouging, according to the Governor’s Office.  

“For decades, oil companies have gotten away with ripping-off California families while making record profits and hiding their books from public view,” said Newsom. “With this proposal, California leaders are ending the era of oil’s outsized influence and holding them accountable. Thanks to the Senate’s quick action, we’re getting this done for California families.”   

Senator Skinner also celebrated the passage of the bill.

“In 2022, while oil companies were hauling in more than $200 billion in profits, Californians were being hit at the pump with record high gas prices – $2.61 per gallon higher than the national average,” Skinner noted in a statement. “Those sky-high prices came at a time when the cost of crude oil was down and there were no changes to our state taxes, fees, or regulations. By passing SBX 1-2 today, my Senate colleagues and I made sure every Californian knows that we have your back.”

Jamie Court, president of Consumer Watchdog, praised the bill’s impositions on the gouging trend.

“This bill puts a watchdog over gasoline price gouging and gives it the teeth to stop the gouging,” Court asserted. “Californians deserve to know their gasoline prices are not being manipulated and this bill gives regulators the tools to determine when California gas prices are artificially high and penalize oil refiners for it. This landmark law will prevent the gasoline price spikes that have plagued Californians for the last decades.”

Court added that SBx1 2 gives the California Energy Commission the power to create a price-gouging penalty on oil refiners when they make too much money per-gallon at a level to be determined.

“The legislation creates new transparency over refinery shutdowns, transactions that compose the crucial spot market where retail prices are set, export and import activity, pipeline activity, and other aspects of the industry that have been shielded from regulators for too long,” Court went on. “The bill also creates a new division of the California Energy Commission dedicated to monitoring the market on a daily basis.”

On the other hand, Catherine Reheis-Boyd, the President of the Western States Petroleum Association, slammed the bill for being “rushed” and “misguided.”

“The legislature should not be in a rush to send this bill to the Governor, but should give it the proper process and vetting that a monumental change in energy policy like this deserves,” Reheis-Boyd argued. “SB X1-2 misguidedly focuses on profits, rather than the root cause of price spikes — shortages and lack of an available supply due to California’s unique fuel specifications and geographic isolation. Price caps, taxes and tax-like penalties do not increase supply or reduce prices, but instead could have the opposite effect.”

But Elected Officials to Protect America, California, representing over 500 elected officials from 49 counties, said that it strongly supports protecting consumers with the bill. EOPA California has crafted a letter specifically for elected officials to sign in support of the bill. In just six days 132 have signed, and the number is rising daily. 

“Families have been forced to cut back on spending and rethink their budgets,” pointed out Eduardo Martinez, Richmond Mayor and member of the EOPA California Leadership Council. “I thank Governor Newsom for standing up for Californians who are being taken advantage of at the gas pump by a cartel of oil refiners It’s apparent that this situation is the consequence of the five big oil refiners in California who make 97% of the gasoline — controlling the supply to artificially drive-up prices.” 

“We live in the shadow of these refineries that spew toxic pollution into the air we breathe on a daily basis,” Martinez went on. “People I represent have died prematurely because of our zip code’s dirty air. Now those same companies are stealing from the people of California. It’s time for the legislature to make SBX 1-2 law.”

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