Government and Politics
December 5, 2022From: California Governor Gavin Newsom
After big oil hiked gas prices and made record profits, Governor Newsom convened a special session of the Legislature and called for a price gouging penalty on oil companies
SACRAMENTO – Following unexplained gas price hikes that led to record profits for Big Oil, Governor Gavin Newsom and Senator Nancy Skinner (D-Berkeley) today unveiled a proposed price gouging penalty on oil companies’ excess profits to deter excessive price increases and keep money in Californians’ pockets.
The language of the proposed price gouging penalty can be found here.
“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.”
Taking on Big Oil’s Excessive Profits
“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 Skinner (D-Berkeley).
The proposal introduced today by Senator Skinner comes as the California Legislature is assembling in a special session called by the Governor to pass a price gouging penalty. The Legislature will also consider efforts to empower state agencies to more closely review gas costs, profits and pricing as well provide the state with greater regulatory oversight of the refining, distribution and retailing segments of the gasoline market in California.
The proposal would discourage oil refiners from fleecing Californians by making it unlawful to charge excessive profits – excessive refiner margins would be punishable by a civil penalty from the California Energy Commission (CEC). The amount of the maximum margin and the amount of the penalty will be determined through the legislative process. Any penalties collected by the penalty will go to a Price Gouging Penalty Fund and then given back to Californians.
The proposal also improves transparency and oversight of the oil industry by the state, expanding the CEC and the California Department of Tax and Fee Administration’s ability to investigate and obtain information on costs, profits and pricing so that the state can better address the causes of pricing irregularities and minimize the likelihood of future supply or price shocks.
According to a recent poll from Consumer Watchdog, 60% of California voters support a price-gouging penalty.
In the third quarter of 2022, from July to September, oil companies reported record high profits:
Phillips 66 profits jumped to $5.4 billion, a 1243% increase over last year’s $402 million;
BP posted $8.2 billion in profits, its second-highest on record, with $2.5 billion going toward share buybacks that benefit Wall Street investors;
Marathon Petroleum profits rose to $4.48 billion, a 545% increase over last year’s $694 million;
Valero’s $2.82 billion in profits that were 500% higher than the year before;
PBF Energy’s $1.06 billion that was 1700% higher than the year before;
Shell reported a $9.45 billion haul that sent $4 billion to shareholders for stock buybacks;
Exxon reported their highest-ever $19.7 billion in profits;
Chevron reported $11.2 billion in profits, their second-highest quarterly profit ever.
Taking action to lower prices at the pump, Governor Newsom in September ordered the switch to winter blend gasoline and demanded accountability from oil companies and refiners that do business in California. Since California’s record-high gas prices of $6.42, the Governor’s actions have reduced those prices to $4.77 most recently – a decrease of $1.65 since the peak.