Sacramento, CA – Consumer Watchdog wrote Governor Newsom and the Vice Chair of the California Energy Commission (CEC) Siva Gunda today to remind them of their previous statements about the need for a public process to determine a gasoline price gouging penalty.
The CEC is voting on Friday to table the penalty deliberations, and the Western States Petroleum Association wants the deliberations to be frozen for 10 years. Consumer Watchdog wrote that anything more than a short freeze on the penalty would take away a deterrent to price gouging, “doom consumers to price spikes and throw your political futures to the whims of what we all know to be an uncaring and reckless industry.”
“When I had previous conversations with Commissioner Gunda about the delay in implementing the price gouging penalty, he said the threat of its implementation was having an impact on the market, in preventing price spikes,” Consumer Watchdog President Jamie Court revealed in the letter. “The refiners were worried about what level the Commission would set, so they were maintaining adequate supply and refraining from price spikes. By taking the penalty off the table, you are opening the market to the price spikes we suffered in 2022. The longer the time frame for freezing deliberations, the greater the opening for price and profit spikes.”
“I shouldn’t have to remind you of your full-throated endorsement of a public process to determine a price gouging penalty in 2023, when, Governor, you called the legislature together in special session to endorse it,” wrote Court.
Governor Newsom, in calling the special session, you said: “Big oil is ripping Californians off, and the deafening silence from the industry yesterday is the latest proof that a price gouging penalty is needed to hold them accountable for profiteering at the expense of California families. I’m calling a special session of the Legislature to do just that, and to increase transparency on pricing and protect Californians from outrageous price spikes in the future.”
After the session was over and the legislation passed, you stated at a press conference: “We’re talking about a penalty for gouging people. We are talking about people taking advantage of you, raking in billions and billions of dollars in excess profit. They’re screwing you. They’re taking advantage of you because they think they can get away with it. And what we’re trying to do is say enough, we’re done.”
Commissioner Gunda, you testified in the legislature (at 1:59:10) about the need for a public process to determine the veracity of a price gouging penalty. You were asked whether “putting a limit on refiners’ profit will bottom line reduce prices at the pump?”
You answered: “The short answer, thank you for that question would be yes. The issue we are trying to look at here is through the bill…and if the bill were to pass, it gives CEC a public process to really evaluate the benefits and the risks…If we see that the penalty would help, it is where we would go. …we think there is an opportunity here to move towards that way.”
“The public process, the rule-making for the price gouging penalty, was never even begun,” Court continued. “The public and public interest groups had no opportunity to prove the case for the penalty. Instead, in what appears to appear a complete abdication to the refining industry and its power, the Energy Commission is voting to halt full consideration of the penalty.
“The outgoing head of the Western States Petroleum Association, in what feels like a victory dance on her way out the door, told Politico yesterday that she wants a ten-year reprieve on considering a price gouging penalty. “To show the oil companies that the state is serious about keeping their business, WSPA has put its stake in the ground that it wants the margin cap stashed away for at least a decade. ‘Anything less than that will not send a market signal,’ said Reheis-Boyd.”
“In other words, if they cannot get a guarantee that they can make as much excessive profits as they want in California for a decade, the companies are not going to invest. Gentleman, giving WSPA what it wants wouldn’t be just like a waving the white flag, it would be like giving over your first-born child too.”
Court noted, “The industry is making considerable profits, more than a dollar per gallon in recent months, and needs California as much as we need it. To capitulate to these demands is to negotiate with terrorists who need to know they will be accountable when they terrorize. Governor, I would urge you to review video of your previous remarks on this topic.
“You both understand this dynamic. Anything more than a short reprieve in considering the penalty will open the market to profiteering. The fact that the vote is being taken on the Friday of a holiday weekend will not conceal your complicity when gas prices spike again.
“I urge you to remember your words about not leaving this industry to its own devices and keep the price gouging penalty in play. Anything less will doom consumers to price spikes and throw your political futures to the whims of what we all know to be an uncaring and reckless industry.”
