Newsom to call special legislative session on gasoline prices

SACRAMENTO, Calif.

California Governor Gavin Newsom said Friday he would call a special session of the state legislature in December to pass a new tax on oil companies as punishment for what he calls “the scam on prices”.

Newsom told reporters on Friday that the special session will begin Dec. 5 after all votes have been counted from the November election and newly elected lawmakers are sworn in.

Gas prices have soared across the country this year due to high inflation, Russia’s invasion of Ukraine and continued global supply chain disruptions. But while gas prices have recovered somewhat nationally, they have continued to climb in California, hitting an average of $6.39 per gallon on Friday, $2.58 above average. national.

“It’s just a price hike,” Newsom told reporters on Friday. “It’s time to get serious. I’m sick of this.”

Kevin Slagle, vice president of the Western States Petroleum Association, said “a better use of the special session would be to carefully examine decades of California energy policy and what they mean for consumers and our economy.”

“If this was anything other than a political stunt, the governor wouldn’t wait two months and call the special session now, before the election,” Slagle said. “This industry is ready now to work on real solutions to energy costs and reliability if that is what the Governor really cares about.”

Several states have opted to suspend their gasoline taxes during the price spike, including Maryland, New York and Georgia. Newsom and his fellow Democrats who control the state legislature have refused to do so, opting instead to send $9.5 billion in taxpayer rebates — which began showing up in bank accounts this week.

It’s unclear how Newsom’s proposed tax would work. Newsom said he was still working out the details with legislative leaders, but said Friday he wanted the money to be “returned to taxpayers,” possibly using the tax money to pay for more refunds.

“We’re going to get back the money that (the oil companies) ripped off and clawed back from hard-working Californians,” Newsom said. “There are many ways to do it.”

The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall tax” on gross oil company receipts when the price of a gallon of gasoline was “abnormally high relative to the price of a barrel of oil”.

This proposal would have required state regulators to determine the tax rate, ensuring that it clawed back oil company profit margins that exceeded 30 cents a gallon. The tax money would then have been returned to taxpayers via rebates.

Newsom did not comment on the proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, serve as a template for the new proposal being negotiated between Newsom and legislative leaders.

The two top leaders of the Legislative Assembly – Senate Speaker Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon – said in a joint statement that lawmakers “will continue to consider all other options to help consumers “.

“A solution that takes excess profits out of the hands of the oil companies and puts the money back into the hands of consumers deserves special attention from the Legislative Assembly,” they said. “We look forward to reviewing the Governor’s detailed proposal when we receive it.

California Republicans – who do not control enough seats to influence policy decisions in the Legislature – called the tax “reckless”.

“Who here thinks another tax is going to lower your gas prices? Will it bring down costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

The California Legislature typically meets between January and August, where it considers bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When called into special session, legislators may only consider matters mentioned in this proclamation.

The last time a California governor called a special legislative session was in 2015, when the then governor. Jerry Brown has asked lawmakers to pass a bill to pay for repairs to state roads and highways. Lawmakers ultimately did nothing.

The California Energy Commission wrote a letter Sept. 30 to five oil refiners asking for an explanation of why gas prices jumped so dramatically and why inventories plummeted during scheduled refinery maintenance. in advance.

Gas prices jumped 84 cents over a 10-day period, an all-time high, the commission wrote. He noted that the price increase came as oil prices fell.

The oil industry had “failed to provide an adequate and transparent explanation for this price spike, which is causing real economic hardship for millions of Californians,” the commission wrote.

The companies that received the letter were Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero.

On Friday, only PBF Energy had responded. Paul Davis, the company’s senior vice president, said antitrust law prohibits him from answering questions in detail. But he has widely said that state policies designed to limit oil production in California are squeezing the industry.

“It is important that there is a full understanding of what the short, medium and long-term implications will be on gasoline supply availability for consumers and businesses,” Davis wrote.

PBF does not operate any service stations in California.

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Associated Press reporter Kathleen Ronayne contributed reporting.

This story was originally published October 7, 2022 6:51 p.m.