The California legislature has approved the nation’s first penalty for price gouging at the pump, voting to give regulators the power to investigate oil companies.
NBC News says Governor Gavin Newsom backed the bill, which came after his call last October for a special legislative session to pass a new tax on oil company profits after the average price of gas in California hit a record high of $6.44 per gallon, according to AAA.
Legislative leaders rejected his initial call for a new tax because they feared it could discourage supply and lead to higher prices.
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. Instead, 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.
California’s gas prices are always higher than the rest of the country because of the state’s taxes and regulations. California has the second-highest gas tax in the country at 54 cents per gallon. And it requires a special blend of gasoline that is better for the environment but more expensive to produce.
But state regulators say those taxes and fees aren’t enough to explain last summer, when the average cost of a gallon of gasoline in California was more than $2.60 higher than the national average.