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Newsom proposes fining oil companies for making too much money
California Gov. Gavin Newsome proposed fining oil refiners he said are "ripping off" Californians while making record profits.
SACRAMENTO - Gov. Gavin Newsom on Monday unveiled a proposal that would impose price gouging penalties on oil companies for their supersized profits during a time of record-high gas prices.
"California’s price gouging penalty is simple – either Big Oil reins in the profits and prices, or they’ll pay a penalty," said 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."
Newsom is calling on lawmakers to approve a penalty for oil companies when their profits pass a certain threshold and then returning the money to drivers.
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California oil refineries made record profits while gas prices spiked
California oil companies raked in double their average profits in the last year.
The proposal would make it illegal to charge excessive profits, with the penalty amount determined through the legislative process.
Any penalties collected will go toward a "Price Gouging Penalty Fund" then given back to California residents. Details on how the money would be distributed were not immediately available.
Additionally, the proposal would expand the ability of the state's departments to investigate and obtain information on costs, profits, and pricing thus improving transparency to help better address price increases and why they happen.
SUGGESTED: California oil refiners posting record profits during gas price spikes: Report
According to a recent poll from Consumer Watchdog, 60% of California voters support a price-gouging penalty.
It could be a popular proposal with voters, who have been paying more than $6 per gallon of gasoline for much of the year. But the big question is how the measure will be received by California lawmakers, especially because the oil industry is one of the state’s top lobbyists and campaign donors.
Republican leaders have already come out against Newsom’s proposal, arguing penalizing oil companies would only raise prices at the pump.
SUGGESTED: Oil companies rake in record profits as consumers struggle with high gas prices
"The last thing that we need to do is increase the cost on Californians who are already paying far too much," Assembly Republican Leader James Gallagher said Monday morning.
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 rest 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 price of crude oil dropped. In the first week of October, the average price of a gallon of gas in California was $2.61 higher than the national average — the biggest gap ever. Since then, oil companies reported billions of dollars in profits.
Here are the reported profits from several oil companies from July to September 2022:
- Exxon: $19.7 billion
- Chevron: $11.2 billion
- Shell: $9.45 billion
- BP: $8.2 billion
- Phillips 66: $5.4 billion
- Valero: $2.8 billion
The Associated Press contributed to this report.