California Gov. Newsom strikes deal to punish fossil fuel companies after first proposal rejected

Democratic California Gov. Gavin Newsom struck a woody pinch authorities lawmakers Monday to "hold Big Oil accountable" amid a agelong streak of nation-leading user power prices.

Newsom and Democratic authorities Sen. Nancy Skinner announced they had agreed to a modified connection cracking down connected fossil fuel and petroleum refining companies that are wished to beryllium charging excessively-high prices. The proposal, which was packaged successful a measure that will now make its measurement done nan California legislature, would create a caller watchdog agency dedicated to monitoring value gouging violations.

"Together pinch nan Legislature, we’re going to clasp Big Oil accountable for ripping disconnected Californians astatine nan pump," Newsom said successful a statement. "Today’s statement represents a awesome milestone successful our efforts to thrust nan lipid manufacture retired of nan shadows and guarantee they play by nan rules."

"This represents immoderate of nan strongest and astir effective transparency and oversight measures successful nan country, and nan punishment would guidelines retired value gouging," he continued. "We’re getting nan occupation done for California families."

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Gov. Gavin Newsom speaks successful Oakland, California, connected Aug. 12, 2022. (Justin Sullivan/Getty Images)

Under nan projected legislation, nan caller authorities watchdog would beryllium a designated agency wrong nan California Energy Commission, nan state's cardinal power argumentation agency. The agency would person wide authorities to analyse refinery data, lawsuit for different accusation and straight mention cases to nan state's lawyer general.

While Newsom and authorities Democrats applauded nan authorities Monday, it represents a watered-down version of a connection nan politician backed successful December to straight punish companies pinch financial penalties if their margins are wished to beryllium excessively high. During a California Senate proceeding successful February, Democrats and experts alike expressed interest nan original connection could lead to moreover higher prices for authorities residents. 

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"Enacting it will trim supply, unit retired producers and trim employment successful a high-paying sector," Michael Mische, a professor astatine nan University of Southern California Marshall School of Business, said during nan hearing, adding that state and power prices would summation arsenic a consequence of nan bill.

A worker walks past pump jacks operating astatine nan Kern River Oil Field successful Bakersfield, California. (AP Photo/Jae C. Hong)

Over nan people of nan past 12 months, California has consistently recorded nan highest mean state prices of immoderate state, moreover surging past $6 per gallon successful some June and October, according to national data. Although pump prices person fallen considerably to an mean of $4.84 per gallon, they are still by acold nan highest successful nan nation.

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California besides charges nan second-highest gasoline taxation — $0.54 per gallon — successful nan nation, only down Pennsylvania wherever lawmakers person introduced authorities to little nan rate.

Though nan caller authorities represents a softer attack to punishing lipid companies, manufacture groups still blasted it for creating further bureaucracy.

"At nan extremity of nan day, this connection does not lick California’s gasoline proviso problem and will apt lead to nan very aforesaid unintended consequences legislators person reiterated to nan Governor:  less investment, little supply, and higher costs for Californians," nan Western States Petroleum Association said successful a statement.

"This is simply conscionable different taxation wrapped successful unchecked and costly bureaucracy."