According to an energy expert who spoke with FOX Business, California imposes a windfall tax on oil companies would be harmful.
California Gov. Gavin Newsom called for a windfall profit tax on the profits above a set amount for companies involved in the extraction, production and refining of oil. The tax's funds would be used to rebates to California taxpayers impacted by high gas prices, according to a press release from Newsom's office.
Newsom claimed in a statement that crude oil prices are down but oil and gas companies have jacked up prices at the pump in California. We're not going to stand by while greedy oil companies fleece Californians. The average price for regular gas in California was $6.29 as of Friday, according to AAA. The price was up 11.3% from the $5.58 average price a week ago. The average price for regular gas nationwide Friday was around $3.80.
Phil Flynn, a FOX Business contributor and senior market analyst at the Price Futures Group, said that the windfall tax would discourage investment in an industry that is desperately in need of capital to stay in business in an increasingly hostile government environment. He said something.
In April 2021, Newsom signed an executive order aimed at halting oil extraction in California by the year 2045. In August, the California Air Resources Board moved to require all vehicles in the state to operate on electricity by 2025, a policy that the governor previously asked regulators to consider.
Flynn told FOX Business that there was a false perception created by politicians that energy companies are making too much money. The government regulations that have made the prices of the products and services go higher than they have been in the past, but they fail to account for the fact that their profits are higher than they have been in the past. It doesn't take into account that most of these energy companies have lost money just a few years ago. Flynn told FOX Business that the windfall tax Newsom called for is a tool to shift blame onto oil companies that are trying to do their job and keep the market well supplied. He said it would restrict supply and make prices rise in the long run.
Flynn said that it would reduce incentive and investment for oil companies and strangle long-term viability, even though a windfall tax may sound nice to the average person. He argued that it could also affect people's 401 K s.
If these companies aren't making profits, who's going to invest in their oil stocks? He said something. If you have oil stocks in your 401 k whether you know it or not, most Americans do, they may not realize that they're taking money out of your 401K to pay for bad policies because those stocks aren't going to do as well.