Oil companies should be penalized for spikes in gas prices, says California with a new bill expected to pass by month’s end.
Last summer in the wake of Russia’s invasion of Ukraine, the average gas price in California reached a record high at $6.44 per gallon. That was over $2.60 higher than the national average. Some places went as high as $8 a gallon. Oil companies blamed reduced supply from Russia, but Russia only supplies 8% of the gasoline coming to the U.S, and the impact of even a total loss of their supply wouldn’t actually be felt until 2025, and nowhere near as much as the 70% price hikes would suggest. The price hikes were the decision of the oil companies wanting to capitalize on the news while they had a scapegoat.
At the time, California Gov. Gavin Newsom asked the state legislature to pass a new tax on oil company profits, to help prevent price spikes. The idea went nowhere at the time, with lawmakers fearing it would drive companies out of the business of providing consumer-grade gasoline, causing instead of preventing price increases.
Instead, lawmakers and Newsom have been working on a bill which would put the decision in the hands of the California Energy Commission. It would allow them to impose civil penalties on oil companies found to be price gouging, and would require companies to disclose their financial information to the state.
The new bill passed easily through the California Senate vote on Thursday. The same day, California Republicans tried to force a vote on another bill to suspend California’s gas tax (currently $0.54/gallon) and gas-related environmental regulations for a year, but the measure failed without even being brought to debate.
Oil companies are not happy with the bill, saying that it would require “a ridiculous level of reporting” and that they weren’t consulted, despite the fact that Newsom’s administration has had numerous public meetings with oil executives about the bill.
Photo: Tada Images / Shutterstock