Newsom Proposes A Civil Penalty On Oil Companies

California Governor Gavin Newsom (D), requested a special session to the state legislature Monday to present a proposal with Democrat Nancy Skinner. It would penalize big oil companies that make “excessive profits”.

Newsom called the special session to urge lawmakers to concentrate on the issue gas prices. He claimed that California’s big oil companies are extorting Californians and that there is no other explanation for record-high pump prices.

Newsom stated that California’s price gouging penalty for Big Oil is very simple. Either Big Oil will rein in profits and prices or they’ll be penalized. “Big Oil has been lying to Californians and goinguge them to fill their own pockets for too long. I look forward working with our legislator partners to see this through.”

It would be illegal for oil companies “excessive profits” to be charged. The California Energy Commission would impose a civil penalty on companies found in violation of this proposal. The CEC will collect fines and deposit them in a Price Gouging Penalty Fund.

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Skinner stated that “putting the Governor’s proposal into print allows the Legislature to begin discussions about this important issue.” “No one can deny the fact that California’s gas prices are outrageously high when compared to other states. California’s high gas prices have a negative impact on consumers and businesses.

The proposal did not define maximum profit margins or penalty amounts. According to Newsom’s press release, these amounts will be decided through the legislative process.

According to KTLA, California’s gas prices are affected by taxes and fees that California has for environmental regulations. California is not one of them. The state’s October gas prices were $2.60 higher than the national average.

The proposal stated that the penalty is a punishment and not a tax. It would require only a simple majority for it to be passed. Alternately, to increase a state tax, the proposal would need approval by a two thirds majority.

Kevin Slagle, a spokesperson of the Western States Petroleum Association, said to KTLA that “Whatever Gov. Newsom may call it a tax, but it is a tax. It will have the same effect on consumers as all taxes, which is to increase costs, not lower them.

Slagle said, “We believe the governor should be truthful about this and let the legislators vote upon a tax. Then sell it to Californians as a tax to see how they feel about it.”

Supporter of Newsom’s proposal, Senator Ben Allen of Santa Monica Democrat, said to the news outlet that while he didn’t object to oil companies having a business model that generates a profit, the extent to which they are taking advantage of people is unfair.