Democratic California Gov. Gavin Newsom reversed his efforts to penalize oil companies for price gouging, despite record-high gas prices.
On Thursday, Newsom presented a proposal to create a new watchdog arm in the California Energy Commission (CEC). This would monitor daily fluctuations in the price of petroleum and ensure market participants “play by rules.” The CEC office proposal would have broad authority to analyze refinery data, subpoena other information, and refer cases directly to the attorney general.
Newsom stated that “We are making significant progress with the Legislature in holding Big Oil responsible for fleecing Californians to the pump.” “With hundreds of local leaders and organizations backing our proposal to impose effective and strong oversight measures on oil companies, it is clear that momentum is in our favor to make this happen for California families.”
“What we’re asking for is simple: transparency and accountability to drive the oil industry out of the shadows,” he continued. “Now it’s time to choose whether to stand with California families or with Big Oil in our fight to make them play by the rules.”
Democratic California Gov. Gavin Newsom said he is “making major progress with the Legislature” on a revised proposal to punish Big Oil for high prices.
Although the governor called the proposal a stronger action, it is a reduced version of an earlier proposal to punish oil companies. According to The Sacramento Bee, it could delay indefinitely the implementation of a state price gouging penalty that Newsom has aggressively advocated.
In December, Newsom announced aggressive actions to punish oil companies for “lying and gouging Californians to line their own pockets.” The comments came after he called on the state’s legislature to develop legislation cracking down on excessive energy price increases and called on the California Senate Committee on Energy, Utilities and Communications to hold a hearing on the topic.
Newsom’s legislation would penalize companies if they raise gasoline prices excessively. The legislation ran into significant problems after state legislators, including Democratic leaders, expressed concern about unintended consequences for consumers.
Professor Michael Mische from the University of Southern California Marshall School of Business stated that SBX1-2 was not in the consumer’s best interest, would not lower retail pump prices, and would not benefit California’s long-term economic future. There are better options.
Mische stated that the bill would reduce supply, make producers redundant, and decrease employment in high-paying sectors. He also said that gas prices and energy prices will rise as a result.
Democratic state senator Steve Bradford claimed during the hearing that legislators must ensure that their actions do not cause harm to consumers.
According to the Energy Information Administration, California has had the highest average gas prices in the country for the past year. In fact, it surpassed $6 per gallon in June and October. Although pump prices in California have dropped significantly in the past two months to $4.87 per gallon on average, they remain the highest in the country.
Newsom’s office did not respond to a request for comment.