Will Your State Punish Oil Companies For Gas Price Gouging Like California?
While oil companies make billions of dollars, they’ve hiked gas prices to unprecedented levels. Some, like the California Energy Commission, wondered if there is some ethical or moral limit for oil company profits when transportation is so necessary and vital in the state. Now, legislators have passed the first-ever law allowing regulators to punish oil companies for gasoline price gouging. Will other states follow suit?
How high did gas prices go?
The law gained traction late last year after California faced gas priced at an average of $6.44 per gallon. Gas prices in the state on average were $2.60 more than the national average. At the same time, all oil companies saw profits soar into the billions of dollars a quarter.
“When you take on big oil, they usually roll you. That’s exactly what they’ve been doing to consumers for years and years and years,” Governor Gavin Newsom told reporters. “The Legislature had the courage, conviction, and the backbone to stand up to big oil.”
If gas prices are regulated, would Big Oil leave?
Of course, the big question now is will big oil stop refining and selling gasoline in the state? Lobbyists floated the idea, offering up reasons why gas in California is more costly to make. That idea rests on the state’s regulations, taxes, and requiring both summer and winter blends, part of its effort to keep carbon emissions down. California has a gasoline tax of 54 cents per gallon.
Also, there is no oil pipeline running into California. Oil lobbyists claim that having to ship it to the state adds even more costs. But there are plenty of oil refineries throughout the state. In fact, California refineries exported more than 10% of their yield last year.
There is a bigger reason for this legislation
But the legislature has a larger reason in mind. Passing this bill requires gas companies to disclose pricing and profit information. A new state agency would be formed to review this information, to the extent, it is given subpoena power. Factored into the new oversight agency will be a panel of experts that combined, make determinations on penalties.
“If we force folks to turn over this information, I actually don’t believe we’ll ever need a penalty, because the fact that they have to tell us what’s going on will stop them from gouging our consumers,” said Assemblymember Rebecca Bauer-Kahan. “There’s truly no other explanation for these historically high prices other than greed,” Assemblymember Pilar Schiavo told NBC4. “The problem is we don’t have the information that we need to prove this, and we don’t have the ability to penalize the kind of historic price gouging we saw last year.”
When it comes to environmental concerns, California has led the country with restrictions and mandates picked up by other states. Automakers use the rules and targets to develop new cars. So based on that alone, it is expected that other states will follow suit with similar legislative changes to avoid last year’s high gasoline prices in the wake of such massive profits.