Gov. Newsom Proposes Penalties for Oil Company ‘Price Gouging’ But Ignores State’s Highest Gas Taxes

Californians are paying the highest gas prices in the entire nation, with the current price nearly $6 a gallon in many locations, according to AAA. Gov. Gavin Newsom claims this is because of greedy oil companies and “price gouging.” Consequently, the governor and Legislature held a special session Monday, and “unveiled a proposed price gouging penalty on oil companies’ excess profits.” They claim this is “to deter excessive price increases and keep money in Californians’ pockets.”

Following the special session of the Legislature, in a press statement titled, “Governor Newsom Unveils Price Gouging Penalty on Big Oil’s Excessive Profits to Protect Californians from Being Ripped Off,” Newsom claims his proposal would discourage oil refiners “from fleecing Californians” by making it unlawful to charge excessive profits. And if they do, “excessive refiner margins would be punishable by a civil penalty from the California Energy Commission.”

The Globe talked with oil industry expert, Dave Noerr, who is also the Mayor of Taft, CA, and President and CEO of Huddleston Crane Service, about Gov. Newsom’s proposal. Noerr says the governor is grossly wrong, and that this is “déjà vu all over again.”

“California’s price gouging penalty is simple – either Big Oil reins in the profits and prices, or they’ll pay a penalty,” said Governor Newsom. “Big Oil has been lying and gouging Californians to line their own pockets long enough. I look forward to the work ahead with our partners in the Legislature to get this done.”

“Putting the Governor’s proposal in print allows the Legislature and the public to begin discussions on this important issue. No one can deny that California’s gas prices were outrageously high compared to other states. And those high prices hurt California consumers and businesses,” said Senator Nancy Skinner (D-Berkeley), who authored the governor’s proposal.

What does this new bill authorize?

“A closer look at the numbers shows an interesting trend. In June of 2008 oil cost $3.12 a gallon or 69% of the cost of a gallon of gas,” Noerr said. “When gas hit $4.53 a gallon next in 2012, oil cost $2.45 a gallon, 54% of the cost of a gallon of gas. In November of 2021 when gas hit $4.60 a gallon, oil cost $1.95 a gallon or 43% of the cost of a gallon of gas.” And Noerr said this was a full three months ahead of Putin’s attack on Ukraine.

Noerr continued: “So, the portion of the cost of a gallon of gas, represented by the cost of crude oil, went from 69% in 2008 to 54% in 2012 to 43% in 2021. And on July 1, 2022 this trend continued. Why?”

“On November 1, 2017, then Governor Jerry Brown supported by Lieutenant Governor Gavin Newsom, signed Senate Bill 1 which substantially increased vehicle registration fees as well as taxes on diesel and gas,” Noerr said. “SB1 also has a provision to automatically, without discussion, increase taxes on gas and diesel annually based on inflation every July 1st, and it has been increasing annually since that date. So, in years when inflation is highest and Californians can least afford it, fuel taxes go up the most.”

Gov. Newsom and Democrats are playing a form of bait-and-switch with taxpayers. They are trying to keep your eye focused on evil Big Oil while they push their green agenda which involves California banning the sale of all gas powered vehicles in the state in just 13 years, replacing them with electric vehicles.

Gov. Newsom must not have read the memo this past weekend: Swiss officials just drafted emergency proposals to ban electric cars and restrict power usage because of energy shortages this winter, the Telegraph reported on Saturday.

Green energy cannot replace oil and gas, and is nowhere near close to replacing oil, gas or coal, yet in September 2020, using his emergency authority during the Covid crisis, Governor Gavin Newsom issued an executive order requiring sales of all new passenger vehicles to be zero-emission by 2035 and “additional measures to eliminate harmful emissions from the transportation sector.” Prior to his executive order, California was aiming to eliminate internal combustion engine autos by 2050.

Assembly Republican leader Jim Gallagher and then-Assemblyman Kevin Kiley offered a solution to California’s highest-in-the-nation gas prices earlier this year, proposing to suspend California’s .54 cent gas tax. But Democrats on the Assembly Transportation Committee hijacked Kiley’s legislation by passing amendments to gut the bill so they could not be accused of voting for the gas tax increase.

Here are some of the policies implemented in California by the Legislature and governor that drive up the cost of gasoline through tax add-ons:

• 54.1 cents – State gas tax
• 25 cents – Cap and Trade (estimate)
• 22 cents – Low Carbon Fuel Standard (estimate)
• 2 cents – Underground Storage Fee
• 10-15 cents – California’s switch to summer-blend costs more to produce than other types of gasoline.
• 14.4 cents – State sales tax (estimate based on 6/20 average price)

Notably, as Globe contributor Chris Micheli observed Monday, “It would appear that a penalty (like a fine) is a type of monetary charge assessed for violating the law. And types of fines and penalties, such as violating the Vehicle Code (e.g., for speeding), are used to punish an offender for violating the law. So, when the Legislature imposes a new Vehicle Code prohibition, and requires a fine or penalty to be paid by the violator, that bill does not require a 2/3 vote.”

“For a penalty against ‘excessive margins,’ one would have to presume that such a bill would provide that an oil company could only make a specified margin on the sale of gasoline in this state, and when a company makes more than that specified margin, then the company would violate the law, and therefore the State could impose a penalty for violating the margin law.”

The language of the proposed price gouging penalty can be found here.

A special session of the CA Legislature begins now.

Time to impose a price gouging penalty on big oil's excess profits & hold oil companies accountable with aggressive transparency measures.

Governor Newsom is working to protect Californians from being fleeced at the pump.⛽️

— Office of the Governor of California (@CAgovernor) December 5, 2022