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California Targets Oil Industry With Profit Cap

California legislators have tabled a bill aimed at extracting more money from oil companies who they blame for excessive gasoline prices in the state, local media report.

Per the Sacramento Bee, the bill was proposed by Democratic Senate Chairwoman Nancy Skinner at the request of Governor Gavin Newsom. In essence, it involved setting a cap on oil companies’ profits, above which ceiling they would be penalized and the money collected from these penalties would be returned to consumers in the form of rebates.

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

California’s legislators and governor have for years targeted the oil industry in the state with measures aimed at effectively curbing their operations there. Last year, Newsom banned fracking, and this year the Los Angeles authorities approved a ban on all oil and gas production within city limits.

Yet gasoline prices are another matter. 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.

However, for the local Democratic legislators and for the state’s governor, fuel retailers and, by association, oil companies are the ones to blame for how much Californians must pay at the pump.

In October this year, Governor Newsom directly accused refiner Valero of ripping people off, saying “Big oil is ripping Californians off, hiking gas prices and making record profits. As Valero jacked up their profits by over 500% in just a year, Californians were paying for it at the pump instead of passing down those savings.”

By Charles Kennedy for Oilprice.com

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