By ADAM BEAM and KATHLEEN RONAYNE, Associated Press
SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom said Friday he’ll call a special session of the state Legislature in December to pass a recent tax on oil company profits to punish them for what he called “rank price gouging.”
Gas prices soared across the nation this summer due to high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the worldwide supply chain.
But while gas prices have recovered somewhat nationwide, they’ve continued to spike in California, hitting a mean of $6.39 per gallon on Friday — $2.58 higher than the national average, in accordance with AAA.
California has the second-highest gas tax within the country and other environmental rules that increase the associated fee of fuel within the nation’s most populous state. Still, Newsom said there may be “nothing to justify” a price difference of greater than $2.50 per gallon between California’s gas and costs in other states.
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“It is time to get serious. I’m sick of this,” Newsom said. “We have been too timid.”
The oil industry has pointed to California’s environmental laws and regulations to clarify why the state routinely has higher gas prices than the remaining of the country. Kevin Slagle, vice chairman of the Western States Petroleum Association, said Newsom and state lawmakers should “take a tough take a look at a long time of California energy policy” as an alternative of proposing a recent tax.
“If this was anything aside from a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is prepared right away to work on real solutions to energy costs and reliability — if that’s what the Governor is really serious about.”
Several states selected to suspend their gas taxes this summer, including Maryland, Recent York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do this, opting as an alternative to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.
It’s unclear how the tax Newsom is proposing would work. Newsom said he continues to be figuring out the small print with legislative leaders, but on Friday said he wants the cash to be “returned to taxpayers,” possibly through the use of money from the tax to pay for more rebates.
The state Legislature briefly considered a proposal earlier this yr that will have imposed a “windfall profits tax” on oil corporations’ gross receipts when the worth of a gallon of gasoline was “abnormally high in comparison with the worth of a barrel of oil.”
That proposal would have required state regulators to find out the tax rate, ensuring it recovered any oil corporations’ profit margins that exceeded 30 cents per gallon. The cash from the tax would then have been returned to taxpayers via rebates.
Newsom didn’t comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, nonetheless, act as a blueprint for the brand new proposal being negotiated between Newsom and legislative leaders.
The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will proceed to look at all other options to assist consumers.”
“An answer that takes excessive profits out of the hands of oil corporations and puts a refund into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look ahead to examining the Governor’s detailed proposal after we receive it.”
California Republicans — who don’t control enough seats to influence policy decisions within the Legislature — have called the tax “foolhardy.”
“Who here thinks that one other tax goes to bring down your gas prices? Goes to bring down any costs on this state? It’s not going to occur,” Assembly Republican Leader James Gallagher told reporters on Wednesday.
Last month, regulators on the California Energy Commission wrote a letter to 5 oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an evidence for why gas prices jumped 84 cents over a 10-day period whilst oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to thousands and thousands of Californians.”
On Friday, Scott Folwarkow, Valero’s vice chairman for state government affairs, responded that “California is the most costly operating environment within the country and a really hostile regulatory environment for refining.” He said that has caused refineries to shut and tightened supply because California requires refineries to supply a particular fuel mix.
He declined to supply details in regards to the company’s operations based on the identical anti-trust concerns. But he said the corporate makes appropriate arrangements to source supply when some refineries are down for maintenance.
Newsom dismissed those arguments, saying that also doesn’t account for a $2.50 difference between California’s gas prices and people in the remaining of the country.
“These guys are playing us for fools. They’ve for a long time,” Newsom said.
The California Legislature often meets between January and August, where they consider bills on a wide range of topics. The governor has the facility to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the problems mentioned in that proclamation.
The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.
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