California lawmakers to meet, eye big oil’s high gas prices

SACRAMENTO, Calif. — Furious about oil companies’ supersized profits after a summer of record-high gas prices, California Gov. Gavin Newsom will officially kick off his campaign to punish big oil producers Monday by asking the Legislature for a fine and giving the money back to drivers.

State legislators will briefly return to the Capitol on Monday to swear-in new members and elect leaders to the 2023 legislative sessions. Newsom has also called lawmakers to a special session this year to approve a penalty for oil company profits exceeding a certain threshold.

This proposal is sure to be popular with voters who have been paying over $6 per gallon for gasoline for most of the year. The big question is how California lawmakers will react to the measure, especially as the oil industry is one the state’s largest lobbyists and donors.

The unusually high number (over 100) of new members who will be taking seats in the Legislature’s first session adds to the uncertainty. Dependent on the outcome in a few close races, more than 25% of the 120 members of the Legislature could be new.

” “It’s almost like the first day at school, where you have to pass an ethics test about a job you’ve never held,” Jamie Court, president and CEO of Consumer Watchdog, an advocacy organization that has partnered up with the Newsom administration in support of the gas proposal.

Angelique Ashby, a Democrat, was one of the new members of the state Senate. She narrowly won her seat after a fierce campaign. Critics tried to use the trend against Ashby by using it to their advantage. The oil industry spent hundreds upon thousands of dollars on TV and radio ads supporting Ashby’s campaign.

In an interview Ashby stated that she has not been approached by lobbyists or other representatives of the oil industry to ask how she would vote about a possible penalty for oil companies. Ashby noted that the oil industry spent the money in “independent expenditures,” which means she had no control over the spending during the campaign.

“Campaigns are not legislation, and the campaign slogans and strategies of my opponent are a thing of the past,” said Ashby, whose district includes Sacramento. “I am focused on the people of Senate District 8, and I will make my decisions based on their best interests. “

As of Sunday night, Newsom hadn’t yet released his legislation. Legislative leaders stated that they won’t likely begin deliberations on any proposal before January.

But the battle has already started. The California Energy Commission held a public hearing last week about why gas prices in California are so high. California prices rose in the summer, as did those across the country. This was due to an increase in crude oil prices following the invasion of Ukraine by Russia.

California’s prices spiked again in October, even while the price of crude oil dropped. The average California gallon of gasoline cost $2 in the first week of Oct. 61 was higher than the national average, the largest gap in history. Oil companies have reported billions in profits since then.

Regulators had hoped to question the state’s five big oil refineries: Marathon, Valero, Phillips 66, PBF Energy and Chevron. Despite the fact that no company representatives attended the hearing, most said that sharing information could be in violation of anti-trust laws.

Newsom attempted to shame these companies by posting a video to Twitter of empty seats during Thursday’s hearing.

“Big oil rips off Californians, and the deafening silence of the industry (at Thursday’s hearing) is the latest evidence that a price-gouging penalty is necessary to hold them accountable for profiteering in the name of California families,” Newsom stated in a news release.

Catherine Reheiss-Boyd, president and CEO of the Western States Petroleum Association said that the oil industry is volatile. She cited billions in losses during the pandemic, when gasoline demand dropped sharply due to many people working from home and cancelling travel plans.

During Thursday’s hearing she blamed the state for driving up gas prices.

” The governor and Legislature should work together to remove policy obstacles that are being imposed on energy industry so we can provide affordable, reliable, and lower carbon energy for all Californians,” Reheiss-Boyd stated.

Severin Boenstein, a University of California Berkeley professor, said that the problem is not at the oil refinery level but at the retail level, where gasoline is sold to drivers.

California’s gasoline market is dominated by name-brand gasoline, which is more expensive, and the state’s gas prices have been consistently higher than the rest of the country since 2015, Borenstein said. He said that we don’t have the discipline and competition from off-brand stations.