California governor signs bill giving energy commission power to oversee oil companies

CNN
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California Governor Gavin Newsom on Tuesday signed a bill that gives the state Energy Commission the power to monitor oil companies to determine potential price gouging and impose corresponding penalties.

“Why are we paying a maximum of $2.61 more per gallon for gas than the national average?” Newsom said Tuesday. “You shouldn’t have endured these price spikes, you shouldn’t have endured them in the future. We’re going to go under the hood and we’re going to fix this like no other jurisdiction has done in this country. . »

Last year, Newsom accused oil companies of price gouging California residents, even when crude oil prices began to fall. At a press conference on Tuesday, Newsom called it “one of the biggest scams in modern American history.”

The new law creates a new division within the California Energy Commission (CEC) to “investigate industry sales and pricing activities and can refer violations to the attorney general for prosecution,” according to the governor’s office. If their office determines there has been price gouging, they can impose a penalty on the oil companies. A penalty amount will be decided by the commission during its investigative process, the legislation says.

The law will provide needed transparency into the state’s oil market and how oil companies set prices, according to state lawmakers who worked on the bill.

“California has sent a clear message to the oil industry: Open your books and prove you’re not inflating prices. Otherwise, you big tankers will pay the price, not the consumers,” said California State Senator Nancy Skinner, one of the sponsors of the law.

Chevron spokesman Ross Allen said in a statement that “Chevron believes California deserves affordable, reliable and ever cleaner energy.”

“But this legislation does not address the fundamental shortage of production and supply in California markets,” Allen said. “The high energy prices this bill seeks to address are a function of an isolated and undersupplied market for specialty gasoline blends. The state’s own regulators have found time and time again that California’s high gas prices are caused by regulation, politics and geography.

The law will go into effect in 90 days, but it will likely take nine to 12 months to “set up” the new division, Newsom said. This commission split is not a silver bullet, but it will take longer-term solutions to ensure Californians don’t have to face unfairly high prices, he said.

Last November, Newsom convened a special session on a possible “price gouging penalty” after previously calling on lawmakers to enact a windfall tax on oil companies. The governor announced on March 20 an agreement with legislative leaders assigning oversight power to the CEC so they can establish potential sanctions.