California Gov. Gavin Newsom mentioned on Friday that he’ll name a special session of the state Legislature on Dec. 5, to go a new tax on oil firms in response to excessive gas prices.
Rich Pedroncelli/AP
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Rich Pedroncelli/AP
California Gov. Gavin Newsom mentioned on Friday that he’ll name a special session of the state Legislature on Dec. 5, to go a new tax on oil firms in response to excessive gas prices.
Rich Pedroncelli/AP
SACRAMENTO, Calif. — California Gov. Gavin Newsom mentioned Friday he’ll name a special session of the state Legislature in December to go a new tax on oil firm income to punish them for what he referred to as “rank price gouging.”
Gas prices soared throughout the nation this summer time due to excessive inflation, Russia’s invasion of Ukraine and ongoing disruptions within the world provide chain.
But whereas gas prices have recovered considerably nationwide, they’ve continued to spike in California, hitting a mean of $6.39 per gallon on Friday — $2.58 increased than the nationwide common, in response to AAA.
California has the second-highest gas tax within the nation and different environmental guidelines that enhance the price of gasoline within the nation’s most populous state. Still, Newsom mentioned there’s “nothing to justify” a worth distinction of greater than $2.50 per gallon between California’s gas and prices in different states.
“It’s time to get serious. I’m sick of this,” Newsom mentioned. “We’ve been too timid.”
The oil business has pointed to California’s environmental legal guidelines and laws to elucidate why the state routinely has increased gas prices than the remainder of the nation. Kevin Slagle, vice chairman of the Western States Petroleum Association, mentioned Newsom and state lawmakers ought to “take a hard look at decades of California energy policy” as an alternative of proposing a new tax.
“If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle mentioned. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”
Several states selected to droop their gas taxes this summer time, together with Maryland, New York and Georgia. Newsom and his fellow Democrats that management the state Legislature refused to do this, opting as an alternative to ship $9.5 billion in rebates to taxpayers — which started exhibiting up in financial institution accounts this week.
Newsom says he desires to return cash to taxpayers
It’s unclear how the tax Newsom is proposing would work. Newsom mentioned he’s nonetheless figuring out the small print with legislative leaders, however on Friday mentioned he desires the cash to be “returned to taxpayers,” probably through the use of cash from the tax to pay for extra rebates.
The state Legislature briefly thought-about a proposal earlier this yr that might have imposed a “windfall profits tax” on oil firms’ gross receipts when the value of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”
That proposal would have required state regulators to find out the tax charge, ensuring it recovered any oil firms’ revenue margins that exceeded 30 cents per gallon. The cash from the tax would then have been returned to taxpayers through rebates.
Newsom didn’t remark on that proposal when it was launched in March, and lawmakers shortly shelved it. It may, nevertheless, act as a blueprint for the brand new proposal being negotiated between Newsom and legislative leaders.
The Legislature’s prime two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — mentioned in a joint assertion that lawmakers “will continue to examine all other options to help consumers.”
“A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they mentioned. “We look forward to examining the Governor’s detailed proposal when we receive it.”
California Republicans — who don’t management sufficient seats to affect coverage choices within the Legislature — have referred to as the tax “foolhardy.”
“Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher informed reporters on Wednesday.
Last month, regulators on the California Energy Commission wrote a letter to 5 oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding a proof for why gas prices jumped 84 cents over a 10-day interval at the same time as oil prices fell. The fee wrote that the oil business had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”
An oil business government blames California’s “expensive operating environment”
On Friday, Scott Folwarkow, Valero’s vice chairman for state authorities affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He mentioned that has triggered refineries to shut and tightened provide as a result of California requires refineries to provide a particular gasoline mix.
He declined to offer particulars in regards to the firm’s operations primarily based on the identical anti-trust issues. But he mentioned the corporate makes acceptable preparations to supply provide when some refineries are down for upkeep.
Newsom dismissed these arguments, saying that also does not account for a $2.50 distinction between California’s gas prices and people in the remainder of the nation.
“These guys are playing us for fools. They have for decades,” Newsom mentioned.
The California Legislature often meets between January and August, the place they contemplate payments on a number of matters. The governor has the facility to name a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can solely contemplate the problems talked about in that proclamation.
The final time a California governor referred to as a special legislative session was in 2015, when then-Gov. Jerry Brown requested lawmakers to go payments about well being care and transportation.
