This article en español.
In the face of public skepticism from lawmakers about his willingness to penalize oil companies for excessive profits, Governor Gavin Newsom dropped that proposal in favor of an alternative that would pursue a similar goal through regulations.
The governor’s office said late Wednesday that it plans to introduce an amended bill in the coming days that would create an oversight division within the California Energy Commission to investigate allegations of price hikes by the oil industry. and authorize the commission to set its rules to address a threshold above which profits would be penalized.
Dana Williamson, Newsom’s chief of staff, said the change in approach was the result of months of consultation with lawmakers, who generally believed an appropriate penalty would be best determined by industry experts.
“We think it’s stronger from where we started,” Williamson said. “It’s the only one of its kind in the country. And it’s really going to put in place an oversight entity that’s going to watch the industry every day.
The amendments, for which language is not yet available, would establish requirements for petroleum refiners in California to regularly report information about factors that can contribute to massive price spikes like the ones the state has experienced l summer, such as maintenance schedules, inventory, and imports and exports. levels.
The oversight division within the energy commission, which would have an independent director appointed by the governor, would be granted subpoena power while it conducts investigations and could refer suspected cases of rising prices. award to the attorney general’s office for prosecution.
Better access to this data that oil companies have historically withheld as proprietary would allow experts to further examine what the right threshold for a profit penalty is, according to the governor’s office, and inform a review process. rulemaking through the California Energy Commission.
“What we’re asking for is simple: transparency and accountability to bring the oil industry out of the shadows,” Newsom, who met with stakeholders on Thursday to outline his new plan, said in a statement. “Now is the time to choose whether to stand with California families or with Big Oil in our fight to make them play by the rules.”
The announcement takes the governor even further away from the concept he urgently enunciated in October, when he called for a special legislative session to pass a tax on oil company profits, punishing the industry for lapses. “inexplicable” between California gas prices and the national average which had risen to over $2.50 a gallon. Prices, and the spread, have fallen since then, along with political momentum.
The idea has also been relentlessly criticized by the oil industry, Republican lawmakers and some economists. Even many of Newsom’s Democratic allies in the Legislative Assembly have been reluctant to pass it, such as during a hearing last month where several state senators expressed doubts that a financial penalty would have the effect wanted to lower prices.
The governor has already dropped his tax for the most politically palatable and passable sentence. Now, even if lawmakers approve the revised measure — his office made it clear Wednesday that the plan does not represent an agreement with legislative leaders — it could be years before new regulations are passed, if California Energy Commission pursues a rule.
Kevin Slagle, a spokesman for the Western States Petroleum Association, which represents the oil industry in California, criticized the new proposal to empower unelected bureaucrats to raise energy costs and potentially make commercial information public. confidential.
“Ultimately, this proposal does not solve California’s gasoline supply problem and will likely lead to the same unintended consequences that lawmakers reiterated to the governor: less investment, less supply, and higher costs. for Californians,” Slagle said in a statement. “It’s just another tax wrapped in unchecked and costly bureaucracy.”
Republican leaders in the Senate and Assembly immediately called the plan a tax hike, pointing to a major messaging hurdle for Newsom as he tries to push the bill through a dodgy legislature.
“As Governor Newsom tries to hide his efforts behind smart words, Californians will see this for what it really is – a gas tax hike amid record inflation and an economic downturn,” Senate Republican Leader Brian Jones of Santee said in a statement.
