The vote signals a smoother journey through the Legislature for the proposal from Governor Gavin Newsom, which was revised after facing last month.
passed the Senate by a vote of 30-8. Democratic Sen. Marie Alvarado-Gil, who represents a Republican-leaning district on the state鈥檚 eastern border, joined GOP Senators in voting against it. The bill cleared the Senate Energy, Utilities and Communications Committee Wednesday afternoon on a party-line vote, though two Republicans abstained from voting.
It will next be heard in the Assembly.
After the legislation passed, Republicans tried to force a vote on a proposal that would suspend the state鈥檚 54-cent gasoline tax and other fuel regulations, which they argue would immediately lower gas prices. Democratic senators voted the measure down.
Advocates and the governor鈥檚 office say they hope lawmakers will deliver the bill to Newsom鈥檚 desk for his signature before the Legislature鈥檚 spring recess, which begins March 31.
The updated legislation would empower the California Energy Commission to impose a maximum profit margin for oil refiners and levy penalties if companies exceed it.
It would also bolster reporting requirements for the oil industry 鈥� including refiners鈥� monthly profit margins 鈥� and create a new division within the commission to monitor industry activity and pricing.
Newsom last fall to reduce dramatic price spikes at the pump.
Democratic lawmakers praised the bill as a marked improvement on its previous version, though some questioned whether it would lead to lower gas prices for California drivers.
鈥淚 don鈥檛 think this is a perfect proposal,鈥� said Sen. Dave Min, an Orange County Democrat. 鈥淏ut it is a damn good shot,鈥� he added, noting that it 鈥渁ddresses a lot of the major problems with this market.鈥�
Sen. Shannon Grove, a Republican from oil-producing Kern County and one of the GOP lawmakers who abstained from voting, said she was 鈥渧ery disappointed in both sides鈥� for being unable to answer questions about specific details in the legislation and how it would affect the market.
Grove questioned why the bill references 鈥渕ajor oil producers鈥� when the regulations are aimed at the refining market, which is downstream from producers, who extract crude oil from the ground.
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.
The State Auditor will determine in 2033 whether to continue or sunset the provisions in the bill, which several lawmakers praised as an important guardrail.
Eloy Garcia with the Western States Petroleum Association, which represents the oil and gas industry in California and other states, warned lawmakers that increased burdens could lead companies to increase costs or pull out of the state altogether.
鈥淩efiners do leave this state,鈥� he said. 鈥淐alifornia puts policies in place that do chase out energy producers. It has happened. It will happen again.鈥�
The governor鈥檚 office has continuously pointed to the record profits claimed by large oil producers last year.
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 Monday 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�
In addition to the oil and gas industry, business and taxpayer groups oppose the legislation. Environmental and consumer groups testified in support.
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�
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.
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