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California eyes penalties for oil companies’ big profits

by The Associated Press | December 6, 2022 at 4:00 a.m.
New Democratic state Sen. Steve Padilla walks through the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)

SACRAMENTO, Calif. (AP) -- California could become the first state to fine big oil companies for making too much money, a reaction to the industry's supersized profits following a summer of record-high gas prices in the nation's most populous state.

Gov. Gavin Newsom and his Democratic allies in the state Legislature introduced the proposal Monday as lawmakers returned to the state Capitol in Sacramento for the start of a special legislative session focused solely on the oil industry.

But the proposal was missing key details, including how much profit is too much for oil companies and what fine they would have to pay for exceeding it. Newsom's office said those details would be sorted out later after negotiations with lawmakers. Any money from the fines would be returned to the public.

Gas prices are always higher in California because of taxes, fees and environmental regulations that other states don't have. But in October, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average -- the biggest gap ever.

Newsom said there was no good way to justify that.

Speaking to reporters, Newsom compared the actions of oil companies to price gougers charging more for hand sanitizer during the pandemic. He said the goal of the penalty is to prevent gas prices from shooting up similarly in the future, calling it "a proactive effort in order to change behavior."

"We're burning up. We're choking up. We're heating up because of these folks," Newsom said, referring to the oil industry and its impact on the environment.

photo Sen. Monique Limón, D-Santa Barbara, pledges allegiance in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
photo Assemblyman Anthony Rendon walks with his daughter Vienna before being sworn in as Speaker of the Assembly during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
photo Assemblyman Anthony Rendon holds his daughter Vienna as he is accompanied by his wife Annie Lam and father Tom Rendon while he is sworn in as Speaker of the Assembly by California Supreme Court Justice Patricia Guerrero during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas Pool)
photo Assemblyman Christopher Ward, is accompanied by his partner Thom Harpole, and children Betty and Billy as he is sworn in as Speaker Pro Tempore during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
photo Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
photo California Gov. Gavin Newsom walks through the assembly chamber with California Controller Malia Cohen during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
photo California Gov. Gavin Newsom takes his seat on the dais in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. At right is Senate President Pro Tem Toni Atkins. California lawmakers briefly returned to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also has called lawmakers into a special session for the purpose of approving a penalty for oil companies when their profits pass a certain threshold and then returning the money to drivers. (Martin do Nascimento/CalMatters via AP, Pool)
photo Assemblymember Stephanie Nguyen, center, of District 10 celebrates Assemblyman Kevin McCarty of District 7 after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
photo Assemblymember Gail Pellerin, of District 28, celebrates after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)

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