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California Passes Gasoline Price Gouging Law

California lawmakers passed legislation this week that will allow penalties to be imposed on fuel retailers for what California’s governor has called price gouging at the pump.

The new law was passed just a week after it was introduced as a bill at the state legislature, evidence of the determination of the state’s leadership to squeeze the oil industry from every direction it can.

“When you take on big oil, they usually roll you — that’s exactly what they’ve been doing to consumers for years and years and years,” Governor Gavin Newsom said.

“The Legislature had the courage, conviction and the backbone to stand up to big oil,” Newsom added, as quoted by Fortune.

Californians pay some of the highest prices for fuel in the United States. While the oil industry and its supporters attribute this fact to the high taxes that California slaps on fuels, Newsom and the Democrat-dominated legislature have accused the oil industry of price gouging and have vowed to put a stop to it.

California has the highest gasoline tax in the U.S. as well as additional taxes that combine to form a higher price for the end product than in other states.

“California’s price gouging penalty is simple — either Big Oil reins in the profits and prices, or they’ll pay a penalty,” Newsom said in a statement in December last year. “Big Oil has been lying and gouging Californians to line their own pockets long enough.”

The record profits that all oil companies made last year amid the oil price spike triggered by Russia’s invasion of Ukraine did not help matters, either. They only increased California’s determination to punish oil companies, including a proposal to impose a cap on the profits that these companies are allowed to make.

Per the new law, it will be up to the California Energy Commission to decide whether an oil company should be punished for the prices, at which it sells its products.

However, the more important part of the new law is that oil companies will be mandated to share copious amounts of information with a newly set up state agency, which will be responsible for monitoring and investigating California’s fuel market.


By Charles Kennedy for Oilprice.com

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  • DoRight Deikins on March 28 2023 said:
    What? I thought all the vehicles in California ran on electricity, or at minimum, hot air from Sacramento. LA has the most pristine air and the lowest prices for transportation in the nation, not? Those reprobates still use fossil fuels?! Beverly Hills should rebel, or at least demand their household and garden staffs walk to work. (And hide their fossil fuel monsters in Palm Springs or Aspen.)
  • David on March 28 2023 said:
    Since as we in the industry know that price gouging in the fashion that politics likes to tout in rhetoric does not in fact exist. it would be interesting to watch events unfold if politicians attempted to actually implement this new tax. cause that's what it amounts to a windfall tax by another name. one of two things would result. either the new tax would be passed onto customers resulting in the opposite effect from the intent. or a far worse fate, fuel would simply stop flowing into California as refineries shift there product to better markets. refinery margins are often slim and I know of one small refinery, whose main market is in California, that's talking about shutting down if margins get any worse. with constantly shrinking US refining capacity the loss of even a small refinery will have economic effects beyond it's region. add to that a major economy grinding to a halt with the current precarious economic state, we could likely skip past recession strate into a depression.

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