By Lara Korte, Jeremy B. White, Sakura Cannestra, and Owen Tucker-Smith, POLITICO

November 30, 2022

THE BUZZ: AGREE TO DISAGREE? — For years, California officials have blamed the state’s high gas prices on oil refiners. Oil industry leaders blamed it on California policies.

After a six hour meeting yesterday, it’s clear neither side is willing to budge.

The meeting, hosted by the California Energy Commission, was convened in the wake of a bafflingly-high spike in gas prices earlier this year. The goal was to figure out just why the state saw such a drastic spike in gas prices in September (topping out at $6.43/gallon) and discuss ways to prevent that from happening in the future.

Things kicked off on a bit of a sour note — with commissioners and lawmakers expressing their disappointment at the fact that none of the five oil refiners who were invited to the meeting were actually in attendance. In letters to the commission, Phillips 66, Valero, Chevron and Marathon declined to attend, citing concerns about violating antitrust laws. They deferred, instead, to testimony from the Western States Petroleum Association, which was in attendance.

PBF Energy was a little more blunt in declining the invite, saying they opted not to attend because of Gov. Gavin Newsom’s “hostile rhetoric” and “baseless” attacks on refiners regarding high gas prices, which they argued are due, in large part, to state regulations and “lack of a transition plan” related to the clean energy mandates.

The company isn’t entirely off-base — the governor has spent much of the fall railing against oil companies, accusing them of “fleecing” customers and going so far as to call a special session to pass a new tax against them, which would claw back some of what he sees as excess profits. Newsom even took to Twitter on Tuesday to chastise the companies for their absence.

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The logo for Chevron Corp. appears above a trading post on the floor of the New York Stock Exchange. | AP Photo/Richard Drew

It was against that contentious backdrop that the hearing proceeded, with testimony from CEC staff, economists, academics and industry experts. There’s no easy answer to the question of high gas prices, which are determined by a multitude of factors. Some pointed to the fact that the global supply of crude was disrupted this year after the Russian invasion of Ukraine and several West Coast refineries went down in the summer. There’s also just certain details we don’t know about how oil companies operate because of antitrust laws — though some have suggested a state subpoena could shed some light on the matter.

But those like Consumer Watchdog President Jamie Court argued that there’s no justification for oil companies bringing in record-high profits in a year when consumers saw record-high costs. The best solution, he said, is the kind of windfall profits cap that Newsom has proposed, otherwise, “we’re going to be an ATM for these oil refineries in perpetuity.”

WSPA President and CEOCatherine Reheis-Boyd, unsurprisingly, did not agree.

“You cannot tax your way out of this problem,” she said. “The only result of a windfall profit tax will make the problem worse.”

Newsom has called a special session on Dec. 5 to take up the windfall profits tax, but legislators have yet to see an actual bill. Newsom’s office said they expect details to be available by Monday, but it’s sounding more and more unlikely that we’ll see any action this month.

Speaker Anthony Rendon’s office has said they don’t anticipate any actual meetings on the tax until the normal session in January.

Following the hearing, Newsom released a statement criticizing the companies for “stonewalling,” and vowed to enact a price-gouging penalty. “...They have no explanation – big polluters are lining their pockets while they cause financial pain for millions of California families and threaten the very future of our planet,” the governor said.

In the meantime you can expect opposition from the oil industry and anti-tax groups to be fierce and frequent. The California Taxpayers Association on Tuesday said the meeting made it clear that the state’s policies are to blame for the prices, and that a tax won’t do any good: “it makes every trip to the grocery store, soccer practice, and grandma’s house more expensive,” President Robert Gutierrez said in a statement.

And Californians Against Higher Taxes has already spent a few thousand dollars on Facebook ads opposing the tax, telling Californians to urge their legislator to vote “no on Gavin’s new gas tax.”

BUENOS DÍAS, good Wednesday morning. Yesterday we got concessions in three closely-watched legislative races— with former state insurance commissioner Dave Jones conceding to Sacramento City Council member Angelique Ashby in Senate District 8, and Democratic Assemblymember Ken Cooley conceding Assembly District 7 to GOP staffer Josh Hoover. GOP Assemblywoman Suzette Martinez Valladares also conceded to Democrat Pilar Schiavo in AD-40.

Quick temperature check on the remaining legislative races —

  • SD-16: Democratic Sen. Melissa Hurtado trails Republican David Shepard by 377 votes.
  • AD-47: Democrat Christy Holstege trails Republican Greg Wallis by just 12 votes. 
  • AD-71: In this Republican-on-Republican race Kate Sanchez leads Matt Rahn by 3,764 votes.