California lawmakers target big oil profits

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(NewsNation) — Paying under $5 a gallon for regular gas would feel like a bargain for Los Angeles drivers after some prices topped $8 in June.

But what appears to be an issue for consumers has become opportunity for gas retailers as, according to the state, summer prices resulted in record refiner profits of $63 billion in just 90 days.

“We’ve seen the profits for the oil refiners in California double this year. The profits here are 30% greater profit than they make anywhere else,“ Jamie Court, the president of Consumer Watchdog, said on NewsNation’s “Rush Hour” Monday.  

At California’s capitol today, a special legislative session was convened by Gov. Gavin Newsom who hopes to pass a windfall profits tax.

The industry is pushing back, pointing to issues such as limited supply, production costs and the nation’s highest gas taxes.

“When you look at those types of policies, that’s at the root of all this and that’s where the governor really could make a difference if he wanted to look at these policies rather than add to them,” Kevin Slagle of the Western States Petroleum Association said during “Rush Hour” on Monday.

As of Monday, Dec. 5, the average price for regular in California remains the country’s highest at $4.67 — a dollar more than the national average of $3.36. Texans have the least expensive gas, paying just $2.72 a gallon.

The California action comes after five major refiners — Valero, Phillips 66, Chevron, Marathon and PBF — failed to show up at a state hearing last week.

The governor wants more price transparency from refiners.

“We should be paying $.69 more per gallon, we shouldn’t be paying $2.69 more per gallon which is what we were doing this year,” Court said. 

But some say a windfall profit tax is not the answer.

“You don’t help them by putting in price controls. That makes it less likely that these people will stay in business — that the petroleum producers will want to supply gasoline to California — so, down the road, it will be even worse,” David Kreutzer, a senior economist for the Institute For Energy Research, said.

Anything to bring down prices is popular with consumers but the legislative fate of a so-called profits gauging penalty is uncertain, as California has already moved to ban the sales of all new gas-powered vehicles by 2035.

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