Big Oil Should Pay New Gas Tax Out Of Windfall Profits, Not Consumers, Consumer Watchdog Tells California Legislature

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Santa Monica, CA—Governor Jerry Brown’s gas tax to fix roads should come out of oil companies’ windfall profits and not out of consumers’ wallets, Consumer Watchdog said today.

“No one disputes that California’s roads are crumbling and we need to invest in fixing them,” wrote consumer advocate Liza Tucker in a letter to California lawmakers. “In recent years, Californians have been paying an unjustifiable amount at the pump, and oil companies should be giving some of that back to fix the roads themselves. Consumer Watchdog calls upon you to oppose the gas tax Governor Brown has proposed until it requires oil refiners to pay some of the billions of dollars in windfall profits they have made recently at the pump.”


Read the letter here:

“Governor Brown has consistently given the oil industry a pass while talking about the evil effects on the climate of the products they sell,” said Tucker. “Brown is letting the oil companies keep their ill-gotten gains while protecting them from taxation— including nixing an oil severance tax that lawmakers favored in 2014 that could have raised $1.5 billion a year in revenue. It’s outrageous that the governor would continue to protect the oil industry at the expense of consumers by taxing the rest of us for road repairs when Big Oil can well afford to pick up the tab.”

Californians paid $10 billion dollars more for their gas than the rest of the nation in 2015 alone, with the gap between state and national prices reaching as much as $1.50 a gallon, according to a review of oil refiners’ quarterly reports submitted to the California Energy Commission’s Petroleum Market Advisory Committee by Consumer Watchdog. Prices skyrocketed at the pump in the wake of mismanagement that put two refineries offline in 2015. Consumers are currently paying nearly 70 cents a gallon more than the $2.30 a gallon price in the rest of the country. The price gap can only be explained as price-gouging by an oligopoly that keeps too little gasoline on hand, the letter said.

 “Big Oil has Californians over a barrel. Driving up gas prices still further at the pump for millions of California drivers is not the right course. Let the oil companies reimburse Californians by paying to fill in the gouges and the potholes. It’s only fair. A vote for this gas tax is a vote against the consumer and for the oil companies that have feathered the governor’s campaign committees and causes and the California Democratic Party with $3.8 million in contributions,” the group wrote lawmakers.  “We urge you to stand by consumers and against the oil companies. Demand that any gas tax comes out of the oil refiners’ pockets.”

Windfall profits allowed major oil companies to pour more money into lobbying in 2015, helping to kill off a provision in legislation on renewable energy standards to slash petroleum use in cars in half.

A Consumer Watchdog report called Brown’s Dirty Hands found that 26 energy companies, including Chevron, Occidental, ExxonMobil, and Conoco-Phillips, contributed $9.8 million to Jerry Brown’s campaigns, causes, and ballot initiatives, as well as to the state Democratic Party since Brown’s election.


The report traced a pattern of legislative and administrative favors done for these companies sometimes in close proximity to donations. The pattern included donations of $4.4 million by these companies to the state Democratic Party, which in turn donated $4.7 million to Brown’s 2014 re-election campaign. Brown’s Dirty Hands led the Fair Political Practices Commission to open an investigation into the Democratic Party and potential violations of the Political Reform Act the report uncovered.



Liza Tucker
Liza Tucker
Liza Tucker is a consumer advocate for Consumer Watchdog, following everything from oil and gas to the regulation of toxic substances in the state of California. She comes to us from Marketplace, the largest U.S. broadcast show on business and economics heard by ten million listeners each week on 400 radio stations. Liza worked at this public radio show for a decade, first as Commentary Editor and then as Senior Editor for both Washington and Sustainability News.

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