SACRAMENTO, Calif. (AP) — Furious about oil firms’ supersized profits after a summer of record-high gas prices, California Gov. Gavin Newsom on Monday will formally start his campaign to punish big producers by asking the Legislature to nice them and provides the a refund to drivers.
State lawmakers will briefly return to the state Capitol on Monday to swear in recent members and elect leaders for the 2023 legislative session. But this yr, Newsom also has called lawmakers right into a special session for the aim of approving a penalty for oil firms when their profits pass a certain threshold.
It’s certain to be a well-liked proposal with voters, who’ve been paying greater than $6 per gallon of gasoline for much of the yr. But the large query is how the measure will likely be received by California lawmakers, especially because the oil industry is considered one of the state’s top lobbyists and campaign donors.
Adding to the uncertainty is an unusually high number of recent members who will take seats within the Legislature for the primary time. Greater than 1 / 4 of the Legislature’s 120 members could possibly be recent, depending on the consequence of a couple of close races where county officials are still counting votes.
“It’s type of just like the first day of faculty and also you get this big ethics test a couple of job that you have never had,” said Jamie Court, president of Consumer Watchdog, an advocacy group that has partnered with the Newsom administration to back the gas proposal.
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Among the many state Senate’s recent members is Angelique Ashby, a Democrat who narrowly won her seat following an intense campaign. The oil industry spent lots of of 1000’s of dollars on radio and TV ads supporting Ashby’s campaign, a trend noticed by critics who tried to make use of it against her.
In an interview, Ashby said she hasn’t been approached lobbyists or others from the oil industry asking how she would vote on a possible penalty for oil firms. She noted the oil industry spent the cash as “independent expenditures,” meaning she had no control over that spending through the campaign.
“Campaigns are usually not laws, and the campaign slogans and methods of my opponent are a thing of the past,” said Ashby, whose district includes Sacramento. “I’m fixated on the people of Senate District 8 and I’ll make my decision based on what’s of their best interest.”
As of Sunday night, Newsom had not yet revealed his laws and legislative leaders said they likely won’t begin deliberations on any proposal until January.
However the battle has already begun. Last week, the California Energy Commission held a public hearing about why the state’s gas prices are so high. California prices spiked over the summer, but so did the remaining of the country — mostly in response to a crude oil price surge after Russia’s invasion of Ukraine.
California’s prices spiked again in October, even while the value of crude oil dropped. In the primary week of October, the typical price of a gallon of gas in California was $2.61 higher than the national average — the most important gap ever. Since then, oil firms reported billions of dollars in profits.
Regulators had hoped to query the state’s five big oil refineries: Marathon, Valero, Phillips 66, PBF Energy and Chevron. But no company officials attended the hearing, with most saying that sharing information could violate anti-trust laws.
Newsom sought to shame those firms publicly, posting a video to his Twitter account of their empty seats during Thursday’s hearing.
“Big oil is ripping Californians off, and the deafening silence from the industry (at the general public hearing) is the newest proof that a price gouging penalty is required to carry them accountable for profiteering on the expense of California families,” Newsom said in a news release announcing the special session.
Catherine Reheis-Boyd, president of the Western States Petroleum Association, said the oil industry is volatile, pointing to billions of dollars in losses through the pandemic when demand for gasoline dropped sharply as many individuals worked from home and canceled travel plans.
During Thursday’s hearing, she blamed the state’s taxes and regulations for driving up gas prices.
“The governor and the Legislature should focus efforts on removing policy hurdles being imposed on the energy industry so we are able to concentrate on providing inexpensive, reliable and lower carbon energy to all Californians,” Reheis-Boyd said.
Severin Borenstein, a University of California-Berkeley professor, said the issue is not on the oil refinery level, but on the retail level where gasoline is sold to drivers.
California’s gasoline market is dominated by name-brand gasoline, which is dearer, and the state’s gas prices have been consistently higher than the remaining of the country since 2015, Borenstein said.
“We just haven’t got the competition and discipline from those off-brand stations,” he said.
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