California Aims to Penalize Oil Firms’ Hefty Profits

(AP) — SACRAMENTO,  California might become the first state to punish giant oil
firms for earning too much money in response to the industry’s astronomical profits in the
wake of the nation’s most populous state’s summer of record-high gas prices.

The idea was submitted by Gov. Gavin Newsom and his Democratic supporters in the state
legislature on Monday, as legislators returned to the state Capitol in Sacramento for the
opening of a special legislative session dedicated to the oil sector.

However, the plan lacked crucial specifics, such as the acceptable profit margin for oil firms
and the penalties they would face for exceeding it. The office of Newsom said that these
elements would be resolved following talks with legislators. Any funds collected through
penalties would be returned to the general public.

California usually has higher gas costs than other states due to taxes, levies, and
environmental laws. In October, however, the average price of a gallon of gasoline in
California was almost $2.60 more than the national average, the largest disparity on record.
Newsom likened the acts of oil firms to those of price gougers who increased the price of
hand sanitizer during the epidemic. He said that the purpose of the penalty is to avoid such
spikes in petrol prices in the future, describing it as “a proactive attempt to modify behavior.” “We are on fire. We are gagging. Newsom spoke about the oil business and its influence on the climate when he remarked, “We are heating up because of these people.” Due to these individuals, people are hardly able to pay their payments.

It might be a popular suggestion with voters, who have paid an average of over $6 per gallon of gasoline for most of the year. The oil business is one of the largest spenders on lobbying and political donations in the state legislature so that passage will be complex.
Importantly, the plan labels the fine as a “civil penalty” as opposed to a tax. Therefore, just a simple majority would be necessary for passage, as opposed to the two-thirds majority
required for tax increases.

Kevin Slagle, a representative for the Western States Petroleum Association, said,
“Whatever Gov. Newsom wants to call it, this is a tax, and it will have the same effect on
consumers as all taxes do, which is to increase expenses rather than reduce them.” “We
believe the governor should be forthright about the nature of this proposal, allow lawmakers to vote on a tax, and sell it to the California public as a tax to gauge public opinion,” The California Legislature is normally in session for most of the year and considers hundreds of measures.

The governor may convene a special session of the Legislature to debate just the subjects he designates. Newsom said that he convened the special session on gas costs to assist legislators in concentrating on the problem.
However, congressional leaders seem to be in no rush to enact the law. Monday’s
extraordinary session lasted just a few minutes, long enough to enact regulations and elect
leaders. They will not gather again until January.

Numerous legislators said that they were unaware of Newsom’s proposal. A few senators
attended Newsom’s press conference outside the Senate chambers to hear what he had to
say. “I do not believe anybody complains to (oil firms) having a business model that generates a profit, but the amount to which they are taking advantage of people does seem unjust,” said state Sen.

Ben Allen, a Democrat from Santa Monica, in favor of Newsom’s proposal. Republicans, who lack sufficient votes to affect legislation, condemned the idea.
Assembly Republican Leader James Gallagher said, “The last thing we need to do is raise
costs for Californians who already pay far too much.”

An unusually large number of freshly elected parliamentarians are preparing to assume their seats for the first time, adding to the uncertainty. About a fifth of the 120 members of the Legislature is new, with two tight contests still undecided.

Angelique Ashby, a Democrat who barely gained election following an intensive campaign, is one of the new state senators. Critics attempted to exploit the fact that the oil business spent hundreds of thousands of dollars on radio and television advertisements supporting Ashby’s campaign against her.

Ashby said that lobbyists and others from the oil business had not asked her how she would vote on a possible punishment. She stated that the money was spent as “independent expenditures” by the oil sector, meaning she had no influence over these expenditures during the campaign.

“My opponent’s campaign slogans and techniques are obsolete,” said Ashby, whose district covers Sacramento. “I am obsessed with the people of Senate District 8, and I will make my choice based on what is best for them.

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