Support For Gov. Newsom’s Windfall Profits Cap and Price Gouging Penalty Gains Steam– As oil companies continue to evade questions about unexplained gas price increases, Governor Gavin Newsom today convened a special session of the California Legislature on December 5 to pass a price gouging penalty on oil companies that will keep money in Californians’ pockets.
The Governor’s action comes on the heels of a state hearing yesterday – which five major oil refiners refused to attend – to investigate this fall’s unprecedented spike in gasoline prices. This spike in gasoline prices resulted in record refiner profits of $63 billion in just 90 days, disproportionately affecting low- and middle-income families.
“Big oil is ripping Californians off, and the deafening silence from the industry yesterday is the latest proof that a price gouging penalty is needed to hold them accountable for profiteering at the expense of California families,” said Governor Newsom. “I’m calling a special session of the Legislature to do just that, and to increase transparency on pricing and protect Californians from outrageous price spikes in the future.”
To combat oil firms’ price gouging, Newsom has proposed legislation. Public Citizen, CalPIRG, Consumer Attorneys of California, Consumers For Auto Reliability and Safety, Consumer Protection Policy Center, and Consumer Watchdog all sent letters in favor of the governor as the special session he called on the subject gets under way today.
The consumer organizations have wrote to Governor Newsom to support his proposal to impose a windfall profits cap and a price gouging penalty on oil refiners when their gasoline prices and refiner profits are unusually high. According to the public interest groups, “We favor a windfall profits cap that restricts how much oil refiners can profit on each gallon of gasoline they refine.” “California’s four major oil refineries increased their average profit by more than two billions of dollars in overcharges.”
The groups noted that during the past 20 years, oil refiners in California made an average of 32 cents per gallon by refining gasoline. They made a profit of 69 cents a gallon this year, more than double their previous margin. The average profit per gallon for the second quarter and the third quarter for the four refiners that report quarterly profits was 86 cents per gallon for Valero, PBF, Phillips 66, and Marathon. None of the four oil refiners had profit margins above 50 cents per gallon prior to this year.
Therefore, a windfall profit cap is desperately required to control California’s high gas costs. How high the profit tax will not be known until next year. However, gas prices have been decreasing slightly.
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