Newsom strikes deal with legislative leaders to limit profit oil companies

Newsom strikes deal with legislative leaders to limit profit oil companies

Gov. Gavin Newsom struck a deal Monday with legislative leaders on a proposal to limit how much profit oil companies can make in California and establish a watchdog to monitor gasoline prices.

Under the proposal, authored by state Senator Nancy Skinner, the California Energy Commission would be allowed to impose a penalty on refiners that charge more than an allowable margin for the price of gasoline, Newsom s press office said in a statement.

The proposal is a change from Newsom's earlier goal to impose a windfall tax on oil companies. It would have required a super majority to be approved.

The bill, if passed by a majority of the Democrat-controlled legislature, would give the watchdog the power to obtain data and records that could reveal patterns of misconduct or price manipulation. In California, crude refiners profits went up to record levels last year, helping to boost crude refiners' profits to all-time highs. The fuel averaged $4.85 a gallon Monday, the highest in the nation.

The governor's latest move in his spat with fuelmakers over alleged price gouging was blasted by the Western States Petroleum Association, an industry group whose members include Exxon Mobil Corp. and Marathon Petroleum Corp.

The idea of empowering unelected bureaucrats and giving them the authority to tax, investigate and penalize refiners will likely lead to the same unintended consequences as his initial proposal - less investment in production, decreased supply and higher costs for Californians, according to Kevin Slagle, association spokesperson. The legislative analysis and discussion needs to be thorough, at a minimum. None A Visual Guide to How America Uses Freight Trains