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California’s Descent Accelerates as Newsom’s New Bill Dings Oil Companies for “Excessive Profits”

California’s Descent Accelerates as Newsom’s New Bill Dings Oil Companies for “Excessive Profits”

A great example of using regulators to create rules that legislators should actually make into law….so voters would know who to blame when unintended consequences arise.

California’s descent into pure socialism appears to be accelerating, as California lawmakers have just approved a measure allowing state regulators to consider punishing oil refiners when those “experts” decide that the firms have made too much money.

The measure passed its final legislative hurdle in the Assembly in a 52-19 vote. Gov. Gavin Newsom pushed the proposal that has been at the center of the Legislature’s special session on gas prices.

Newsom could sign the bill as soon as Tuesday.

…Newsom’s measure creates a new committee within the California Energy Commission that will be empowered to gather private business information and data from refiners to consider whether to set a cap on company profits and a potential penalty when the cap is exceeded. The funds from the penalty would go into a fund, which the Legislature would then determine how to spend. That could include rebates back to taxpayers.

Last fall, Newsom pushed for a windfall tax on oil companies after the average gas price in California hit a record high of $6.29 per gallon. Legislators nixed this plan, fearing it could increase prices before the November election.

Instead, Newsom and lawmakers agreed to let the California Energy Commission decide whether to penalize oil companies for price gouging. But the crux of the bill isn’t a potential penalty — it’s the reams of new information oil companies would be required to disclose to state regulators about their pricing.

The companies would report this information, most of it to be kept confidential, to a new state agency empowered to monitor and investigate the petroleum market and subpoena oil company executives. The commission will rely on the work of this agency, plus a panel of experts, to decide whether to impose a penalty on oil company profits and how much that penalty should be.

“If we force folks to turn over this information, I actually don’t believe we’ll ever need a penalty because the fact that they have to tell us what’s going on will stop them from gouging our consumers,” said Assemblymember Rebecca Bauer-Kahan, a Democrat from Orinda.

The firms impacted suspect that the implementation will be problematic.

Western States Petroleum Assn. argues that prices are higher in California as a result of the state’s policies to limit gasoline production.

California relies on about five main oil refiners to produce gasoline, which means the state is isolated from alternative backup sources, and maintenance issues can reduce supply and cause price spikes.

The legislation will require oil companies to provide the state with more information around planned maintenance, which could make it easier to avoid having several refineries go offline at the same time, drastically reducing supply. If unplanned maintenance occurs, regulators will have more tools to investigate.

But the petroleum association argues that giving the energy commission the ability to cap profits could carry negative consequences for the industry.

Limiting profits and placing additional requirements on refiners could drive companies out of the state, reducing supply and increasing fuel costs, the oil group said. The industry had urged the state to take more time to understand the bill’s potential effects on supply.

Gas shortages and extreme gas prices will be an interesting pairing with electric-vehicle demands and a shaky power grid.

The state-control of profits and their distribution has been noted.

Newsom’s bill is a great example of using regulators to create rules that legislators should actually make into law….so voters would know who to blame when unintended consequences arise.


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Subotai Bahadur | March 29, 2023 at 6:51 pm

Granting that I have long ago given up on California being anything but a burden to our nation, and in fact am sure that they are determined to be so, I have to admit that seeing California both blacked out and with no petrol to move in a car centered culture and infrastructure does offer the possibility of a certain amount of amusement.

Given what can be seen as coming, if one is in the petroleum business, perhaps moving as much of your operation to another state as you can might be a reasonable thing to consider. If you are retail in that business, perhaps it is time to make preparations to shut down as quickly and efficiently as possible before the organic waste impacts the rotating airfoil.

Since stores [of any kind] require a constant influx of stock to stay in operation, perhaps retail chains and individual outlets should be getting emergency plans for orderly shutdown and withdrawal from California set up too.

That influx of stock is brought pretty much by trucks. Trucks require fuel. If it costs too much, it is cheaper and safer NOT to deliver. If you are an independent trucker, probably you should have started preparing to move your operations out of California a while ago and not picking up or delivering there when things go TANGO UNIFORM. If you are a shipping chain, similar preparations should be made. They want to be the Socialist and Environmental paradise? Let them do as they will.

And if there are still any free people remaining within 100 miles of the coast, y’all are probably gonna get caught up in the economic/political collapse.

Subotai Bahadur

In the Soviet Union, anyone born there, even if they left the country, were considered to always be a Soviet citizen. Returning to visit always carried the risk of the Gulag. California considers any resident of the state to always be a resident. Years ago, those retiring from the military and mustering out while in California had their retirement taxed even after they moved from the state. That was eventually overturned. If you have lived in the state, never come back and any considering moving to California has better brush up on Marxist-Leninist-Newsomist theology of the PDRK.

    BierceAmbrose in reply to alaskabob. | March 29, 2023 at 10:18 pm

    So, just like New York does — couple of states so burdensome people move away even if they’ll get double-taxed for doing that.

The Anti-Dog-Eat-Dog Rule.
Right on schedule!

Believing one’s virtue signaling is a sign of intelligence when in fact it isn’t.

Newsom is such a corrupt useful idiot. It’s a great tragedy.

Question for the number crunchers; IF they stop selling gas in CA, does it put the country over the finish line for reducing total pollution?

They should tax consumers too if they buy something worth a lot more to them than what they paid for it. That’s called consumer surplus, and it corresponds to what’s called profit on the seller’s side.

The sum of profit and consumer surplus is the amount of increase in the nation’s wealth.

    BierceAmbrose in reply to rhhardin. | March 29, 2023 at 10:48 pm

    “The sum of profit and consumer surplus is the amount of increase in the nation’s wealth.”

    That’s the beginning of a course Market Economics 101: fundamentals.

    The people who need to get it won’t listen, but what did that famous heretic say to that earlier church back in the day: Yet, still it moves.

It would be great if affected companies simply refuse to comply, and when the state then moves to compel them to do so, they simply leave California. Newsom would get his all electric vehicles ASAP, since there would be no more gas or diesel, and the consequences would be glorious to watch. Back when they passed AB5, I was hoping Uber and Lyft would simply stop doing business in CA, again it would have been fun to watch. But it might also have effected real political change such that we would not now be faced with this new attack on free enterprise.

And, greasy Newsolini actually possesses the imperial arrogance and gall to aspire to become President of the U.S., and to bring his cancerous and corrosive socioeconomic policies to bear upon the entire U.S.

As if it’s not sufficiently disqualifying that he’s run California into the ground and created conditions that make it impossible for middle-class citizens and business owners to enjoy financial prosperity and a decent quality-of-life anywhere in California.


Doing wonders for real estate prices elsewhere.

Know this: The agenda is NOT the agenda… the agenda is to purge dissenters so a smaller cabal can control power.

    BierceAmbrose in reply to Andy. | March 29, 2023 at 10:50 pm

    Curious what’s gonna happen with their small cabal when people figure out Irish Democracy is a thing.

George_Kaplan | March 29, 2023 at 10:56 pm

Is there any reason oil companies couldn’t simply transfer their profit out of state e.g. intellectual property fees or somesuch so as to ensure revenue but not profits are made in California?

I think this is just another prong in Biden’s attack on petroleum production.

Isn’t this just a revival of the old oil “windfall profits” tax?

I want him to be eminently successful in destroying California. That way, if Biden is forced out of the presidential race (let’s pray on that), Republicans face a challenger who has such an awful record that it should scare the hell out of most voters.

“…to consider punishing oil refiners when those “experts” decide that the firms have made too much money.”

Now, do government.

“…that they have to tell us what’s going on will stop them from gouging our consumers.”

If there is evidence of actual price gouging, fine, take action on that. Its California, I’m sure they already have laws on price gouging.

Instead, they are empowering an unelected “commission” of bureaucrats no doubt made up of Bernie Bros, AOC acolytes, and other Communists, to determine the maximum allowable profit margin for a business and what is a “reasonable” rate of return for investors. Isn’t that effectively setting the price for gasoline throughout the State? If the producers raise their prices, the commission is in a position to declare anything above their sliding cap to be excess profit subject to confiscation on behalf of the State.

Just as so-called “red flag laws” begin from the premise that you can infringe on someone’s constitutional rights just because you think it’s a good idea, this measure proceeds from the premise that oil companies and refineries are gouging consumers by default.

Isn’t all profit excess for Communists and Socialists?

We’ve been through this, before. The last time gas companies were accused of price gouging, they were audited, and the reason for the differential in gas prices in California and the rest of the country was found to be California State regulations and taxes. So. Newman has found a different way to steal from citizens.

I think he would make a great VP for Kamala.

Laws must make clear the threshold you must cross. With that said, what is the definition of “Excessive”? If it is up to the state to decide, then it’s not a law, it is a diktat.

    NotCoach in reply to George S. | March 30, 2023 at 11:20 am

    Let us look on the bright side. Perhaps such stupid laws will force SCUTUS to declare progressive taxation unconstitutional. One rate for all.

JackinSilverSpring | March 30, 2023 at 9:54 am

Simply put, in the absence of monopoly power, there is no such thing as excessive profits or price gouging. In the long run, times of high profits make up for times of low profits. If there were indeed high profits other oil refineries would open up or refined oil would flow into the state from other places. It will be interesting to see what happens when some of the five remaining oil refineries close because of losses when demand goes south in the upcoming recession.

E Howard Hunt | March 30, 2023 at 10:25 am

How about a “feckless prophet act” to rid ourselves of these crooked, politicos and their personal money grubbing, doom scams?

So what will their response be when the “greedy” refineries shut down?

Don’t forget that California has multiple different fuel blends for “air quality” purposes (because air never moves around) which increases prices.

Huh….last year, 2022, oil companies made about .37 cents per gallon in CA. Government taxes and fees were $1.50 or 5x. Want cheaper gas? Cut the government confiscation and the 37 types of gas the refiners have to make in that state.

    diver64 in reply to diver64. | March 30, 2023 at 6:38 pm

    BTW: remember that with the shut down demanded and enforced by Gruesome and the Dems in Cali the Oil Companies lost money. They have to get that back to stay in business.

California should just ban gasoline in the state. I’m sure it’d be fine.