Yahoo Autos California Wants to Fine Oil Companies For Gasoline Price Gouging
Gas prices are down across the country, even here in California. But they’re still higher in the Golden State than just about anywhere else in the country. As of this writing, according to AAA the national average gas price is $3.38 per gallon; in California it’s $1.33 higher at $4.71. The price difference has been hitting California drivers hard enough that the state sent out billions in gas tax stimulus checks to help low-income residents. But oil companies are still raking in the green. Now, state officials want to hold oil companies responsible, as Governor Gavin Newsom announced a penalty aimed at companies accused of price-gouging at the pump.
State officials will convene in a special session to come up with a strategy for the penalties. “California’s price gouging penalty is simple,” Governor Newsom said in a statement. “[E]ither Big Oil reins in the profits and prices, or they’ll pay a penalty. Big Oil has been lying and gouging Californians to line their own pockets long enough. I look forward to the work ahead with our partners in the Legislature to get this done.”
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Under the rules, the new law will essentially discourage refineries from overcharging on their per-barrel oil price. Excessive margins would get hit with a civil penalty from the California Energy Commission. The exact amount that qualifies as “excessive” will be determined by state legislators. Any penalties collected will go to a fund called the Price Gouging Penalty Fund, which will be disbursed back to California residents. The law would also expand oversight of the state’s oil industry.
These moves come after state officials say they’ve been unable to get answers from oil companies regarding why California gas prices are so uniquely high. A hearing was convened at the end of November that would’ve had oil company executives explain themselves before state officials. But the oil companies were a no-show, claiming that their testimony would require them to divulge “trade secrets.”
Meanwhile, those oil companies have been raking in record profits. Phillps 66 reported a profit increase of 1,243 percent over last year’s earnings; Exxon’s earnings were the highest ever recorded; PBF Energy recorded profits that were 1,700 percent higher than last year’s. State residents will have to wait and see if any of this new government activity has any effects on gas prices.
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