For more than two decades, Californians have been plagued by chronic gasoline price spikes and a much greater gap with US gasoline prices than is justified by added taxes and environmental costs.
The special session legislation signed by Governor Newsom yesterday in the Capitol rotunda is the beginning of the end for those price spikes and what we have dubbed “the Golden State Gouge.”
Here’s a few reasons why the new law is a big deal for the state and for reining in oil refiner profiteering.
Sunshine is the best disinfectant. The detailed information the oil refiners will have to disclose to the state will prevent the type of market manipulation of our gasoline prices we have seen over the last twenty years. Refiners will not be able to bring all their refineries down at once without state approval. They won’t be able to rig a high price on the spot market, where the price retailers pay refiners for gas is set, because every transaction will be monitored. If they start slowing production or exporting our fuel, regulators will know and be able to take action.
The stick is as important as the carrot. Refiners will not leave a state where they have more than 25 million customers. However, if they get out of line and start trying to charge too much per gallon, regulators will be able to impose a price gouging penalty on them. The hammer is a windfall profits cap that the California Energy Commission is empowered to set on per gallon profits. Refiners will have to return excess profits. Consumer Watchdog will be there to make sure the penalty is set at an appropriate level.
Trust but verify. A new market monitoring bureau, modeled on the Federal Trade Commission, will watch the industry daily for signs of gas price manipulation, in consultation with the Attorney General’s office. We will be there to make sure this new division of the California Energy Commission is a committed and effective watchdog.
After twenty years of waiting for a governor and legislature to take on the Golden State Gouge finally we have a governor and legislature that have delivered on a promise to hold big oil accountable.
We are very grateful to Governor Newsom and legislative leaders for prioritizing California drivers this year. The law signed yesterday, SBx1 2, is a very big deal for limiting the overcharges Californians have perennially paid at the gas pump.
Thanks for all your support.