It鈥檚 pedal to the metal for California state lawmakers on a proposal to crack down on oil industry profits.
Several people working on the issue say the goal is for lawmakers to deliver the bill to Newsom鈥檚 desk for his signature before the Legislature鈥檚 spring recess, which begins March 31.
鈥淲e鈥檙e going to hold Big Oil accountable for ripping off Californians at the pump,鈥� Newsom said in a news release announcing the 鈥渄eal鈥� between him and legislative Democrats. 鈥淭his represents some of the strongest and most effective transparency and oversight measures in the country, and the penalty would root out price gouging.鈥�
During an informational hearing last month on the governor鈥檚 proposal for a 鈥減rice gouging penalty,鈥� some lawmakers on the industry. The bill鈥檚 newest version would hand that responsibility to state regulators.
The updated legislation would bolster reporting requirements for the oil industry 鈥� including refiners鈥� monthly profit margins 鈥� and create a new division within the California Energy Commission to continuously monitor industry activity and pricing.
鈥淲e collect this kind of information for all the state鈥檚 utilities that provide essential services like electricity and natural gas,鈥� said Tyson Slocum, director of the Washington DC-based consumer rights organization Public Citizen. 鈥淪o, it really shouldn't be controversial to extend similar types of transparency and disclosure on the state's significant petroleum industry.鈥�
SBX1-2 would also allow the energy commission to create rules authorizing a civil penalty against companies that engage in price gouging.
The proposed Division of Petroleum Market Oversight would be made up of a director appointed by the governor, economists, petroleum market experts and investigative staff. The group would also have subpoena powers and the ability to refer violations to the Attorney General.
California drivers have long paid more on average for a gallon of gas than the rest of the country, due in part to the state鈥檚 isolated fuels market, environmental regulations and a 54-cent gas tax. But energy economists say there is a roughly 40-cent 鈥渕ystery surcharge鈥� on California gas which can鈥檛 be explained by taxes and regulations.
According to UC Berkeley energy economist Severin Borenstein, that surcharge cost California drivers $8 billion in 2022.
Oil industry groups have been fighting the proposal since last fall, when Newsom announced his intent to crack down on high gasoline prices while companies reported record profits.
鈥淯nfortunately for Californians, the bill is now more expensive and onerous than the original plan,鈥� said Kevin Slagle, spokesperson for the Western States Petroleum Association, which represents the oil and gas industry in California and other states.
Slagle added the proposal 鈥渄oes nothing on fuel supply policy, which is how to address costs.鈥�
The proposal is scheduled for a hearing in the Senate Energy, Utilities and Communications Committee at 1:30 p.m. on Wednesday.
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