Angered by huge profits by oil companies after a summer of record gasoline prices, California Gov. Gavin Newsom will formally launch his campaign Monday by asking the Legislature to pass fines to punish big producers and return prize money to drivers. .
State legislators will return briefly to the state capitol on Monday to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also called on lawmakers in a special session to pass approval for oil companies when their profits exceed a certain threshold.
It’s sure to be a popular proposition among voters, who have been paying more than $6 a gallon for gas for much of the year. But the big question is how California lawmakers will get the measure across, especially since the oil industry is one of the state’s top lobbyists and campaign donors.
The unusually high number of new members taking seats in the Legislature for the first time adds to the uncertainty. More than a quarter of the legislature’s 120 members could be freshmen, depending on the outcome of some close races in which county officials are still counting votes.
“It’s like the first day of school and you get this big ethics test about a job you never had,” said Jamie Court, president of Consumer Watchdog.Among the new members of the state senate is Angelique Ashby, a Democrat who won her seat after an intense campaign. The oil industry spent hundreds of thousands of dollars on television and radio ads to support Ashby’s campaign, a trend that critics tried to use against him.
In an interview, Ashby said he had not been approached by lobbyists or others in the oil industry to ask how he would vote on a potential oil company approval. He said the oil industry spent the money as “independent spending”, meaning it had no control over that spending during the campaign.
“Campaigns are not the law, and my opponent’s campaign slogans and strategies are a thing of the past,” said Ashby, whose district includes Sacramento. “I am passionate about the people of Senate District 8 and will base my decisions on what is best for them.”
As of Sunday night, Newsom had not yet revealed his legislation, and legislative leaders said they likely would not begin deliberations on any proposal until January.
But the battle has already begun. Last week, the California Energy Commission held a public hearing on why gasoline prices are so high in the state. California prices rose over the summer, but so did the rest of the country, mainly in response to crude oil price increases following Russia’s invasion of Ukraine.
California prices rose again in October, even as the price of crude fell. In the first week of October, the average price of a gallon of gasoline in California was $2.61 more than the national average, the largest difference ever. Since then, oil companies have reported billions of dollars in profits.
Regulators had expected to challenge the state’s Big Five oil refiners: Marathon, Valero, Phillips 66, PBF Energy and Chevron. But no company officials attended the hearing, and most said sharing the information could violate antitrust laws.
Newsom tried to publicly embarrass those companies by posting a video on his Twitter account of their empty seats during Thursday’s hearing.
“Big Oil is ripping off Californians, and the industry’s deafening silence (at the public hearing) is the latest evidence that price gouging penalties are needed to hold them accountable for speculating at the expense of Californian families.” Newsom said in a statement. Press release announcing the special session.
The oil industry is unsustainable, said Katherine Rehis-Boyd, president of the Western States Petroleum Association, pointing to billions of dollars in losses during the pandemic, when gasoline demand dropped sharply as many people worked from home and commuted. canceled the plan.
During Thursday’s hearing, he blamed state taxes and regulations for raising gas prices.
“The governor and the legislature must focus their efforts on removing the policy constraints being placed on the energy industry so that we can focus on bringing affordable, reliable and low-carbon energy to all Californians,” Rehce-Boyd said. “
Severin Borenstein, a professor at the University of California-Berkeley, said the problem is not at the oil refinery level, but at the retail level where gasoline is sold to drivers.
Borenstein said California’s gasoline market is dominated by more expensive brand-name gasoline, and gasoline prices in the state have been consistently higher than in the rest of the country.
“We don’t have the capability and discipline to have those off-brand stations,” he said.