California Gov. Gavin Newsom released a plan on Monday to fine oil companies for excessive profits in an effort to control future spikes in gas prices.
“I hope we never have to go there because I hope the oil companies change their ways,” he said. “If they don’t, I expect every cent to go back into the pockets of people being screwed by oil companies.”
As the Associated Press reported, the plan was vague and failed to define how much profit is too much, and what will the fine be for exceeding the cap.
JUST IN: Gov. Newsom unveils price gouging penalty on oil companies he wants the California legislature to consider.
— Ashley Zavala (@ZavalaA) December 5, 2022
This would cap gas refining profit margins, and if exceeded triggers a penalty, then deposited into fund to be distributed back to customers.
But, many blanks: pic.twitter.com/P7AaUgjJbe
Gas prices are always higher in California because of taxes, fees and environmental regulations that other states don’t have. But in October, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average — the biggest gap ever.
Newsom said there was no good way to justify that.
Speaking to reporters, Newsom compared the actions of oil companies to price gougers charging more for hand sanitizer during the pandemic. He said the goal of the penalty is to prevent gas prices from shooting up similarly in the future, calling it “a proactive effort in order to change behavior.”
“We’re burning up. We’re choking up. We’re heating up because of these folks,” Newsom said, referring to the oil industry and its impact on the environment. “And people are barely able to pay their bills because of these folks.” (AP)
Since the fine is being categorized as a “civil penalty” rather than a tax, the measure can pass on a simple majority.
“Whatever Gov. Newsom wants to call it, this is a tax and it’s going to have the same impact that all taxes do on consumers, and that is to raises costs, not bring them down,” Kevin Slagle, spokesperson for the Western States Petroleum Association, told AP. “We think the governor should be honest about what this is and let the legislators vote on a tax and sell it to the California public as a tax and see how people feel about it.”