California governor calls for fines on oil companies' profits as prices soar

California governor calls for fines on oil companies' profits as prices soar

The California legislature is about to convene a special session called by Gov. In an effort to combat the state's high fuel prices, Gavin Newsom is urging lawmakers to impose fines on oil companies' profits when they reach a certain level.

Newsom made a special session last week accusing energy firms of price gouging while pointing out record high profits in the industry amid a surge in gasoline prices in the fall.

Oil industry representatives do not deny that energy firms have seen a surge in profits this year, but say market forces and government policies against fossil fuels are to blame.

Kevin Slagle, a Western States Petroleum Association spokeswoman, said that nobody wants to hear about companies making a lot of money when things are tough, but it really comes back to the market. Earnings are going to be higher when there's high demand. Earnings are going to be lower when there's low demand. Newsom's move to implement a windfall tax and other regulations on the energy industry will only drive Californians' cost up further, according to opponents. The state already has the second-highest fuel tax in the nation and the highest regulations against the fossil fuel industry.

According to AAA, the average price for a gallon of gas in California is $4.77 on Monday, more than $1.35 higher than the national average of $3.40.

Slagle told FOX Business Newsom that the governor's previous actions, such as a ban on selling cars with gas engines by 2035, have resulted in higher prices, and is a result of the ban on selling cars with gas engines.

When you have a governor saying, 'We don't want you here, we're going to ban fuels,'' signals also affect costs, Slagle said. California regulations have made it increasingly difficult to produce and transport fuel in the state, and therefore more costly to do so.

He argued that adding a windfall profits tax on an already difficult situation is not a recipe for prices going down.

The governor's office didn't respond immediately to FOX Business' request for further details on the plan, such as where the profit threshold might be set for fines.