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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