By The Office of Governor Gavin Newsom
SACRAMENTO – Today, Governor Gavin Newsom and Attorney General Rob Bonta met with leaders representing a coalition of hundreds of organizations, stakeholders and local leaders to unveil new, stronger proposals to hold Big Oil accountable.
At the meeting, Governor Newsom shared new details of the proposal – including the creation of a new independent watchdog within the California Energy Commission (CEC) charged with monitoring California’s petroleum market on a daily basis to ensure market participants play by the rules. The division would have access to new information required to be reported by refiners, subpoena power to compel production of other data and records that would reveal patterns of misconduct or price manipulation, and direction to refer violations of law to the Attorney General for prosecution.
Additionally, the CEC would be authorized to set a price gouging penalty via a public rulemaking process, to hold Big Oil accountable for making excessive profits at the expense of Californian families. The CEC would establish a penalty structure that deters excessive pricing by imposing a civil penalty on refiners who charge more than a maximum allowable margin for the price of gasoline.
The Governor’s proposal also enhances the state’s authority to analyze why California has seen unexplained higher gas prices since 2015 – sometimes referred to as the “mystery gasoline surcharge” – and enforce reporting requirements on the oil industry to provide greater transparency into California’s petroleum market and encourage companies to play by the rules. More details of the Governor’s proposal are here.
What Governor Newsom said: “We’re making major progress with the Legislature to hold Big Oil accountable for fleecing Californians at the pump. With a coalition representing hundreds of organizations and local leaders backing our proposal to impose strong and effective oversight measures on oil companies, the momentum is on our side to get this done for California families. What we’re asking for is simple: transparency and accountability to drive the oil industry out of the shadows. 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. ”
What they’re saying:
- “As many Californians struggle to make ends meet, oil companies like Chevron and Exxon continue raking in record profits on the backs of consumers,” said Attorney General Rob Bonta, co-sponsor of the Governor’s proposal. “Enough is enough. I stand with the Governor to defend hardworking California families and to provide greater transparency and oversight in the marketplace.”
- “The emphasis of this proposal on creating an independent division that will investigate competition in the California gasoline market, and find the source of the Mystery Gasoline Surcharge, is exactly what we need,” said Severin Borenstein, economist at UC Berkeley. “That new organization needs substantial staffing and resources, as well as the power to compel companies to provide confidential information, all of which is in the proposal. I am strongly supportive of it.”
- “After twenty years of waiting for a governor to take action on gasoline price gouging, I am so grateful to Governor Newsom for standing up for Californians and putting it all on the line to make this price gouging penalty happen. This will be a landmark law that will set a standard for America,” said Consumer Watchdog President Jamie Court.
- “Working people were hit hard by price gouging at the pump, and we need more protections for people while holding Big Oil accountable — Gov. Newsom’s proposal is exactly how we do that and keep prices low,” said Tia Orr, Executive Director of SEIU California.
- “The actions of the oil industry to line their pockets and double their profit margins has forced Californians on fixed incomes to make unconscionable budget decisions, going deeper into debt and sacrificing essential goods or medical care, just to afford their commute or get their kids to school,” said Brandon Dawson, Director of Sierra Club California. “The price gouging penalty is a long-overdue tool that to prevent oil refiners from running roughshod over our communities. We commend Gov. Newsom for the updated accountability provisions and commitment to ensuring this never happens again.”
- “The startups and small businesses we support as well as the individuals in our green workforce training programs suffer from high gas prices,” said Matt Petersen, co-founder of LA Cleantech Incubator. “We know the future of growing our state’s economy is defined by climate leadership, and we are so grateful to the Governor for his leadership on this proposal.”
- “We support Governor Newsom’s call to end the oil industry’s price gouging,” said Amee Raval, Asian Pacific Environmental Network. “For generations, Big Oil has profited at the expense of environmental justice communities: poisoning our air, land, water, and bodies with massive refineries and backyard oil wells. Now, oil companies are making record profits while working class Californians struggle with skyrocketing gas prices that drive up the cost of living. We’re glad to see our elected officials in Sacramento finally stand up to big oil.”
HOW WE GOT HERE:
- Gas prices reached a high of $6.42 per gallon last fall, a record $2.61 more per gallon than the national average. Last fall’s spike occurred while crude oil prices dropped, state taxes and fees remained unchanged and gas prices did not increase outside the western U.S., so the high prices went straight to the industry’s bottom line.
- This spike in gasoline prices resulted in record refiner profits of $63 billion in just 90 days, disproportionately affecting low- and middle-income families, driving inflation higher and making it harder for California families to make ends meet.
- The Governor convened a special session of the Legislature in December to hold Big Oil accountable with a price gouging penalty. Also in November, all five major oil refiners refused to attend a state hearing to investigate the unprecedented spike in gas prices.
- Governor Newsom will protect consumers from ongoing price gouging by requiring refiners to confidentially report information needed for the state to effectively monitor and deter harmful conduct by the fuels industry.
- Governor Newsom’s proposal includes establishing a new division within the CEC to provide independent oversight and analysis of California’s petroleum market for the protection of consumers. The new division would have the power to subpoena information deemed necessary to root out and address abuse of market power in the petroleum market in California.
- The Governor’s price gouging penalty would discourage oil refiners from fleecing Californians by authorizing the California Energy Commission (CEC) via a public rulemaking process, and informed by expert analysis, to impose a civil penalty on refiners who have engaged in price gouging.