East Bay Times – California Approves Nation’s First Big Oil Watchdog. Here’s How It Will Work.

By Eliyahu Kamisher, EAST BAY TIMES

In a bid to tamp down the Golden State’s highest-in-the-nation gas prices, California lawmakers on Monday passed legislation to set up the country’s first watchdog body tasked with investigating the oil industry.

The bill, SBX 1-2, which passed the State Assembly in a 52-19 vote on Monday, is the culmination of a bitter battle between Gov. Gavin Newsom and some of the country’s largest oil companies after the state saw gas prices topping $6.40 a gallon twice last year. After a large dip over the winter, California gas prices have slowly ticked higher to an average of $4.82 on Monday.

Newsom slammed the industry for “price gouging,” an accusation that gained political traction after oil giants reported historic profits. But industry representatives said the state’s environmental regulations, high taxes, and the transition away from fossil fuels are the cause of high prices and an increasingly volatile gas market.

“There’s truly no other explanation for these historically high prices other than greed,” Assemblymember Pilar Schiavo, a Southern California Democrat, said on Monday during a hearing in Sacramento. “The problem is we don’t have the information to prove this, and we don’t have the ability to penalize the kind of historic price gouging we saw last year.”

The current legislation is a comprise between lawmakers and the governor. In December, Newsom proposed legislative language that would set an across-the-board cap on profits by the state’s oil refineries. If refiners exceeded those profit margins, they would face financial penalties.

Now, the Legislature is kicking responsibility to a new watchdog body, backed by subpoena powers, within the California Energy Commission. Based on findings from the watchdog entity, the commission could issue penalties at its discretion on the state’s oil refiners.

Any regulatory action and resulting profits penalty could take months or far longer as the energy commission sets up multiple new bodies, establishes a lengthy rulemaking process, and institutes complex new reporting requirements governing oil refiner data.

“If we experienced some price spikes, like immediately in the next few months, there won’t be a lot of ability to respond,” State Senator Nancy Skinner, who authored the bill, said in an interview last week. “A good portion of the bill is new disclosures that would be required. So we’ll take some time to do that and it will take some time for the experts to analyze it.”

The legislation gives the governor power to appoint the head of the new watchdog body, called the Division of Petroleum Market Oversight, subject to Senate authorization. Another oversight body, the Independent Consumer Fuels Advisory Committee, will be comprised of academic and legal experts along with representatives from organized labor, consumer advocacy, and the oil industry.

“We’ll comply. We comply with every law,” said a senior oil industry source. He said the legislation is meant to “deflect the real issue around California policies: They’re trying to drive energy business, energy companies out of business for the replacement of electric vehicles.”

Republican lawmakers also blasted the legislation, they say the answer to reducing gas prices is suspending the state’s 54-cent gasoline tax, which is used to fund highway and transportation projects.

“The fact remains that (this legislation) acts as a tax,” said Assemblymember Jim Patterson of Fresno, who said the bill is being rushed through the lawmaking process. “This is an unprecedented use of legislative and executive power, and I object to it strenuously.”

Consumer Watchdog, which called for the profits cap, has backed the revised legislation along with Severin Borenstein, a leading gas prices expert at UC Berkeley.

Latest Energy Videos
Video thumbnail
Who is Behind SB 540?
02:29
Video thumbnail
ABC 7: Controversial CA Energy Bill Moves Forward
08:15
Video thumbnail
KCBS-LA (CBS) - Los Angeles, CA: Late-Night Vote Can Spike Gas Prices
02:26
Video thumbnail
KCAL-LA - Los Angeles, CA: How Will Phillips 66 Closing The Refinery Impact Consumers At The Pump?
03:04
Video thumbnail
KCBS-LA (CBS) - Los Angeles, CA: Phillips 66 To Close Refinery
03:01
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Controversy Over SF's Bottle Bank Pilot
04:40
Video thumbnail
KTLA-LA (CW) - Los Angeles, CA: Newsom Signs Gas Law Aimed At Preventing Spike In Gas Prices
03:14
Video thumbnail
KNBC-LA (NBC) - Los Angeles, CA: New CA Law Aims To Protect Gas Price Spikes
02:14
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA: New Laws On Oil And Gas In California
03:04
Video thumbnail
Consumer Alert: Newsom Takes on Gasoline Price Spikes
00:31
Video thumbnail
KCBS-LA (CBS) - Los Angeles, CA: Chevron Moving Headquarters to TX
03:03
Video thumbnail
KGTV-SD (ABC) - San Diego, CA: Californians Overcharged For Gas in 2015
01:55
Video thumbnail
KTXL-SAC (FOX) - Sacramento, CA: Oil Windfall Profits Law Under Microscope
06:06
Video thumbnail
KGTV-SD (ABC) - San Diego, CA: Watchdog Blames Oil Industry For High Prices
02:26
Video thumbnail
KGTV-SD (ABC) - San Diego, CA: Who's To Blame For Recent Spikes In Gas Prices?
02:16
Video thumbnail
Support Oil Driller Accountability, AB 3155
00:54
Video thumbnail
Consumer Alert: The Buck Stops This Summer
01:29
Video thumbnail
New Consumer Alert Exposes Deceptive Oil Industry Attack On Governor Newsom
01:39
Video thumbnail
KOVR-SAC (CBS) - Sacramento, CA: Signs Fueling Debate Over Gas Tax
02:24
Video thumbnail
Consumer Alert: More Deceptive Big Oil Ads Targeting California
01:31
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: CRV Fee on Alcohol Starts On January 1st
02:31
Video thumbnail
Consumer Alert: Deceptive Oil Ads
01:38
Video thumbnail
Consumer Alert: Big Oil’s BS Mailer
01:52
Video thumbnail
KABC-LA, CA: Lawmakers Should Prevent Refineries from Selling Expensive Summer Blend of Gas Overseas
02:58
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: California Gas Prices Are Soaring Again
00:32
Video thumbnail
KCAL-LA - Los Angeles, CA: Gas Prices Skyrocketing
02:52
Video thumbnail
KTLA-LA (CW) - Los Angeles, CA: So Cal Gas Prices Nearing $6 a Gallon
03:20
Video thumbnail
Spectrum News 1 (San Fernando Valley) - Los Angeles, CA: Controversy Over Gas Storage Facility
03:50
Video thumbnail
KFMB-SD (CBS) - San Diego, CA: Gas Tax Increase Takes Effect July 1st
03:23
Video thumbnail
CBS 8 - Los Angeles, CA: What You Need to Know About Gas Prices
02:02
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: BottleBank Update, Is It Really Effective?
02:39
Video thumbnail
Senator Portantino, Shame on You
01:18
Video thumbnail
Senator Portantino: Protect Our Communities From Oil Drillers
00:51
Video thumbnail
KERO-BFL (ABC) - Bakersfield, CA; Oil Drilling Near Homes Can Cause Health and Safety Concerns
03:06
Video thumbnail
KNBC - LA, CA; Consumer Watchdog's Liza Tucker On New Concerns With Santa Susana Field Lab Clean Up
04:09
Video thumbnail
(ABC) - LA, CA; SoCal Edison's New Income Based Proposed Charges Might Not Be As Stable As They Seem
02:40
Video thumbnail
(CBS)-Fresno, CA; Victory For Californians As Bill Passes That Will Regulate Profits Of Oil Refiners
02:17
Video thumbnail
CNBC - Jamie Court Speaks About The Bill That Would Penalize Oil Refineries For Price Gouging
06:39
Video thumbnail
KXTV(ABC) - Sacramento, CA; Governor Newsom Announced A New Deal With Lawmakers To Take On Big Oil
02:56
Video thumbnail
KNBC-LA (NBC) - Los Angeles, CA; Holding Utility Companies Accountable For Power Outages
02:01
Video thumbnail
Consumer Watchdog at CA Senate Energy Cmte 2 22 23
50:54
Video thumbnail
KFMB CW - San Diego, CA; Oil Companies Need to be Held Accountable for High Gas Prices
02:42
Video thumbnail
KTTV (FOX) - Los Angeles, CA; Recap Of Jamie Court's Testimony At The Senate Hearing For Gas Prices
05:07
Video thumbnail
KGTV(ABC) - SD, CA; Jamie Court Will Testify at the Price Gouging Hearing for Rising Gas Prices
01:17
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA; SoCal Gas Bill Sticker Shock
04:24
Video thumbnail
Spectrum News 1 - Los Angeles, CA; Who Is SoCal Gas Buying Their Gas From?
09:18
Video thumbnail
Why SoCal Gas is at Fault For Doubling Your Natural Gas Bill
01:43
Video thumbnail
KNBC - Los Angeles, CA; Spike In Natural Gas Prices
02:32
Video thumbnail
KCBS - Los Angeles, CA; New Year, New Pain At The Pump
03:02
Latest Energy Report

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.