California will limit the amount of profit oil companies can make in the state under legislation pushed by Gov. Gavin Newsom to control rising gas prices.
The state Assembly passed a bill Monday that allows the California Energy Commission to impose a penalty on refineries that charge more than an allowable margin for gasoline. Establish a watchdog, equipped with subpoena powers to obtain data and records, to monitor the market on a daily basis. The state Senate passed the bill on March 23, and Newsom is expected to sign it Tuesday morning.
The bill gives the governor’s office unprecedented oversight of the industry and comes months after a spike in California gasoline prices led Newsom to accuse refiners of “ripping off” consumers while making a profit best regards. During his re-election campaign last year, the Democrat criticized every major refiner by name for raising prices.
Prices in California then soared to record levels, helping boost crude oil refinery profits to record highs. Fuel averaged $4.82 a gallon Monday in California, the highest in the nation, according to AAA. The state has seen a decline in refining capacity in recent years as refineries are encouraged to switch to renewable energy.
The Western States Petroleum Association, an industry group whose members include Exxon Mobil Corp. and Marathon Petroleum Corp., said earlier this month that California’s action will likely lead to less investment in production, decreased supply and higher costs in the state.
The bill’s author, Sen. Nancy Skinner of Berkeley, said in a statement that the legislation contains the nation’s strongest transparency and oversight measures over the oil industry.
Photo Credit – iStock.com/choness
