A Sudden Death in Sacramento;

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Atty. General’s Anti-Gouging Bill, Opposed by Oil Companies, Killed Unexpectedly At Final Step

Santa Monica, CA — A measure proposed by California Atty. Gen. Bill Lockyer that would have made it possible to prove — and prevent — price gouging by oil refiners in California was universally expected to pass the California Legislature this session. Suddenly, in the final hours of the legislative session, a final Assembly vote that would have sent AB457 to Gov. Arnold Schwarzenegger for his signature was canceled by the bill’s cosponsor, Assembly Speaker Fabian Nuñez.

The measure had a powerful opponent: oil companies. And Gov. Arnold Schwarzenegger, to whom oil and energy companies have given more than $3 million, had not supported the measure.

The last-minute loss of a baby-step bill to protect Californians from predatory pricing would not have happened under the rules of Proposition 89, the Clean Elections Initiative, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights.

“The measure would curb the power of large corporate lobbies through both contribution limits and voluntary funding for political candidates who prefer to spend their time talking with voters rather than begging for large contributions,” said FTCR Research Director Judy Dugan.

Lockyer’s staff indicated to the Foundation for Taxpayer and Consumer Rights that Nuñez had concluded that there were no longer 41 certain votes — the number required for passage — for the measure, and not enough time to corral the wobblers.

The bill would have allowed the declaration of a state of emergency and with it the ability to aggressively investigate price gouging, not just in times of natural disaster but also in times of “abnormal market disruption,” which could apply to a sudden price spike that has no readily apparent cause. Such as the soaring gasoline prices that hit California motorists this spring, peaking at $3.38 for a gallon of regular.

The measure also would have allowed such investigations at the wholesale as well as retail level, which would have covered the state’s oil refiners.

The definition of “abnormal price disruption” had been weakened by amendment to appease the oil lobby, which supporters thought at least guaranteed it passage in the full Legislature.

AB457 now joins the nearly one dozen bills killed or stalled by the oil lobby in this legislative session. “I cannot believe how many legislators don’t have the courage to stand up to them,” said Assemblyman Johan Klehs to the San Francisco Chronicle July 14. See for that story.

What many legislators do believe is that the oil industry’s record profits provide unlimited funds for influencing politics. Chevron, for example, spent $1.2 million in California political contributions in 2005 and $1.7 million in 2004, an election year. This year, Chevron has already spent $6.5 million on political contributions, including several million to defeat Proposition 87, the Clean Energy Initiative, on the November ballot. Proposition 87, by funding development of alternative fuels and vehicles, would reduce the political influence of Chevron and other oil companies by reducing the state’s dependence on fossil fuels.

“The only preventive for the demise of decent public policy bills like AB457 is to pass Proposition 89 on the November ballot,” said Dugan. “Proposition 89 would also shut down the power of large industries and their lobbies to kill any legislation that causes them the slightest irritation.” Proposition 89, added FTCR, would also curb such industries’ spending for and against ballot measures. For more details, see

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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