SAN FRANCISCO – The Environmental Working Group is urging California’s legislature to approve Gov. Gavin Newsom’s plan to end gas price gouging, saying it will send a message to the oil industry that its days of fleecing hard-working Americans at the pump are over.
The plan is embodied in legislation introduced in a special session of the legislature by Sen. Nancy Skinner (D- Berkeley) that, at press time, lawmakers were still considering.
In a January 5 letter to Newsom, EWG California Director of Government Affairs Bill Allayaud says oil companies took advantage of California consumers by charging “way out of line” gas prices at the pump. “[T]here is no way that the pump price increases could be explained by normal business and refining practices. Californians were simply ripped off,” he wrote.
For too long, Californians have suffered from sky-high gas prices driven by oil companies’ seemingly never-ending quest to wring as much profit from them as possible. The average price of a gallon of gas sold in the state has soared to as much as $7, almost twice the national average. And nothing justifies the price except unadulterated greed.
The legislation to tackle this problem would cap oil companies’ profit gap – their “maximum gross gasoline refining margin” based on the average monthly earnings an oil refiner makes per barrel on the California wholesale gas market. This is a straightforward approach to prevent future out-of-control gas prices punishing residents, says EWG.
The bill would empower the California Energy Commission to impose civil penalties on oil refiners that exceed the profit gap limit. Lawmakers could tap the resulting special fund created by these penalty fees to issue refunds to California families.
Faced with the prospect of a financial hit, money-grabbing oil companies might think twice before trying to squeeze every possible dollar they can from their captive customer base.
The oil industry may claim that factors like the war in Ukraine, the pandemic, or some combination of those and other issues are to blame for the Golden State’s eye-popping gas prices. But the fact that, even accounting for California’s specific gas taxes, gas prices in the state far exceed those Americans are paying elsewhere is evidence enough that Californians are being fleeced. Just five oil refiners produce nearly all the gas sold in the state.
And when given the chance to explain themselves, the companies instead chose silence. They were invited to a California Energy Commission hearing in late November to explain the exorbitant gas prices, but refused to attend by claiming a need to protect their confidential business information, Allayaud writes in his letter. “[T]he real reason they hid from public view is that they know that they cannot justify what they did,” he writes.
California rightfully enjoys its reputation as the nation’s leader on environmental policy – it strongly supports electric vehicles, which have zero or low emissions and help in fighting the climate crisis. The planet must move away from the use of gas, and the governor’s executive order seeking no new internal combustion engine automobiles sold in the state by 2035 is another plan EWG endorses. In the meantime, we’re stuck with gas-powered cars, so a long-term solution is required to tackle the lingering problem of high gas prices.
Oil companies are also hoping to overturn a law that bans them from planting drilling rigs in neighborhoods near schools. Evidently, they just want what’s worse for California and its hard-working residents – and they’ll keep at it until they’re forced to stop.
Skinner’s bill “is a good way to continue to expose what happened last year [with gas prices] and to prevent it from happening again,” Allayaud writes in his letter to Newsom.
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The Environmental Working Group (EWG) is a nonprofit, non-partisan organization that empowers people to live healthier lives in a healthier environment. Through research, advocacy and unique education tools, EWG drives consumer choice and civic action
