Gavin Newsom plans to fine oil companies for making too much money and returning those funds to the public.
The plan was unveiled by the Democratic governor and state senator Nancy Skinner during a special legislative session that focused solely on the oil industry.
Newsom said that California s price gouging penalty is simple: Big Oil reins in the profits and prices or they ll pay a penalty. Big oil has been lying and gouging Californians to line their own pockets long enough. Only a simple majority would be needed for passage, instead of the two-thirds majority required to raise taxes, because the proposal classifies the fine as a civil penalty and not a tax.
The governor's proposal didn't provide key details, including how much profit is too much for oil companies and what fine they would have to pay for exceeding it. Newsom's office said that details would be sorted out later after negotiations with lawmakers. Any money from the fines would be returned to the public.
On Tuesday, the average gas price in California was $4.71 per gallon, higher than the national average of $3.38. That is still well below California's average levels of $5.46 per gallon.
CAIFORNIA IT S UNPRECEDENTED Gas prices are always higher in California because of taxes, fees, and environmental regulations that other states don't have.
Newsom said the penalty was to prevent gas prices from shooting up in the future, and that it was a proactive effort to change behavior. Oil industry representatives don't 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 for the Western States Petroleum Association, told FOX Business on Monday that no one wants to hear about companies making a lot of money when things are tough. Earnings are going to be higher when there's high demand. Earnings are going to be lower when there's low demand. The California Legislature is in session most of the year, considering hundreds of bills. The governor can call lawmakers into a special session to discuss issues he specifies. Newsom said that the special session on gas prices would help lawmakers focus on the issue.
Legislative leaders don't seem to be in hurry to pass the bill. The lawmakers convened in a special session for just minutes Monday, long enough to adopt rules and appoint leaders.