Gov. Gavin Newsom reached an agreement with legislative leaders Monday on a proposal to limit the profits that oil companies can make in California and establish a watchdog to monitor gasoline prices.
Under the proposal, written by state Sen. Nancy Skinner, the California Energy Commission could impose a penalty on refineries that charge more than an allowed margin on the price of gasoline, Newsom’s press office said in a statement
The proposal represents a shift from Newsom’s previous goal of imposing a windfall tax on oil companies. It would have required a super majority to pass.
The bill, which needs a simple majority of the Democratic-controlled Legislature to pass, would give subpoena powers to obtain data and records “that could reveal patterns of misconduct or price manipulation.”
Gasoline prices in California soared to record levels last year, helping boost crude oil refinery profits to record highs. Fuel averaged $4.85 a gallon on Monday, the highest in the country.
The governor’s latest move in his spat with fuel makers over the alleged price hike was criticized by the Western States Petroleum Association, an industry group that includes Exxon Mobil Corp. and Marathon Petroleum Corp.
“Empowering unelected bureaucrats and giving them the authority to tax, investigate and penalize refiners will likely lead to the same unintended consequences as their original proposal: less investment in production, reduced supply and higher costs for Californians,” said Kevin Slagle, a spokesman for the association. e-mail. “At the very least, this needs extensive time for analysis and legislative discussion.”
