California Democratic Gov. Gavin Newsom this week made a sudden about-face in his efforts to punish oil companies with price-gouging penalties amid record-high gas prices and an energy crisis.
Newsom on Thursday unveiled a proposal to create a new surveillance arm within the California Energy Commission (CEC) that would monitor daily price fluctuations in the petroleum market to ensure market participants “are sticking to the rules.” The proposed CEC office would be given broad powers to analyze refinery data, solicit other information, and refer cases directly to the Attorney General.
“We are making great strides with the Legislature to hold Big Oil accountable for cupping Californians at the pump,” Newsom said in a statement. “With a coalition representing hundreds of organizations and local leaders supporting our proposal to impose strong and effective regulatory measures on oil companies, the momentum is on our side to make this happen for California families.”
“What we are asking for is simple: transparency and accountability to bring the oil industry out of the shadows,” he continued. “Now it’s time to decide whether we’re going to fight for California families or for Big Oil to play by the rules.”
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California Democratic Gov. Gavin Newsom said he was making “great strides with the Legislature” on a revised proposal to punish big oil for high prices. (Tom Williams/CQ-Roll Call, Inc. via Getty Images.)
However, while the governor branded the proposal a “stronger” measure, it represents a scaled-down version of a separate proposal punish oil companies. Ultimately, it could also indefinitely delay implementation of a state penalty for price gouging, which Newsom has been aggressively pushing for, according to The Sacramento Bee.
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In December, Newsom announced aggressive actions Punish oil companies for “lying and gouging Californians to line their own pockets.” The comments came after he urged state legislatures to draft legislation addressing excessive energy price hikes and asked California’s Senate Committee on Energy, Utilities and Communications to hold a hearing on the issue.
The Newsom-backed legislation would fine companies found to be “excessively” raising gasoline prices. However, the legislation ran into significant obstacles after experts and state lawmakers, including leading Democrats, expressed concern it would have unintended consequences for consumers.
A worker walks past pump jacks in operation at the Kern River oil field in Bakersfield, California. (AP Photo/Jae C Hong)
“The enactment of SBX1-2 is not in the best interests of the consumer, will not lower gas pump prices, and is not in the best long-term economic interest of California,” Michael Mische, a professor at the University of Southern California’s Marshall School, said during a Business hearing last month. “There are better alternatives.”
“Passing will reduce supply, displace producers and reduce employment in a high-paying sector,” Mische continued, adding that gas and energy prices would rise as a result of the bill.
Democratic State Senator Steve Bradford argued during the hearing that lawmakers “must make sure we act first [do] no harm to consumers.”
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For the past year, California has consistently had the highest average gas price of any state, exceeding $6 a gallon in both June and October, according to data from the Energy Information Administration. Although gas pump prices in the state have fallen significantly over the past two months to an average of $4.87 per gallon, they are still by far the highest in the country.
Newsom’s office did not respond to a request for comment.
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