By Dustin Gardiner, SAN FRANCSICO CHRONICLE
October 7, 2022
Gov. Gavin Newsom announced Friday that he plans to call a special legislative session to confront California’s high gas prices, including his proposal to create a windfall tax on the profits of oil companies.
“It’s time to get serious,” he told reporters during a press conference in Sacramento. “Nothing justifies these outrageous and unjustifiable prices. They’re fleecing you for billions and billions of dollars.”
Newsom said he will call the special session on Dec. 5, the same day that new lawmakers are expected to be sworn into office after the Nov. 8 election. He said state leaders have, for too long, been timid in confronting big oil about price gouging.
Californians are paying about $2.60 more per gallon for gasoline than the nationwide average. Statewide, prices hovered around $6.39 a gallon on Friday, and diesel prices were at $6.41 per gallon, according to AAA. In San Francisco, gas prices were $6.59 per gallon on average and diesel was $6.54 per gallon.
Newsom first announced his support for a windfall tax a week ago, as the per-gallon average price of gas in California soared more than 84 cents in just 10 days.
The Democratic governor hasn’t released more details of his proposal, which would need to be approved by legislators. He has said, however, that revenue from the tax would go directly back into residents’ pockets.
“This is not a performative effort,” Newsom said on Friday. “What’s performative is sending out another letter and having another investigation.”
His announcement of a special session seemed to come as a surprise to legislators, though many Democrats voiced support for it. The top two Democratic leaders in the Legislature, Assembly Speaker Anthony Rendon of Lakewood (Los Angeles County) and Senate President Pro Tem Toni Atkins of San Diego, said the idea of a windfall tax deserves “strong consideration.”
“We look forward to examining the Governor’s detailed proposal when we receive it,” they said in a joint statement.
Assembly Member Rebecca Bauer-Kahan, D-Orinda, was leaving a fundraiser for Democratic candidates at the Fairmont Hotel on Hob Hill, which was headlined by first lady Jill Biden, when she heard about Newsom’s announcement. She said she was also waiting to see details of his tax plan, but supports calling a special session.
“There’s a real sense of urgency with the prices right now that are inexplicable,” Bauer-Kahan said. “If we have a way to act, we should.”
But Newsom’s proposal drew jeers from the Western States Petroleum Association, an industry trade group that blames high prices on California’s climate regulations, in part. Spokesperson Kevin Slagle called the move a “political stunt,” and said Newsom wouldn’t wait until after the election to hold a special session if he were serious about the problem.
“A better use of the special session would be to take a hard look at decades of California energy policy and what they mean to consumers and our economy,” Slagle said in an email.
Gas prices in the Bay Area and California have soared recently due to a host of factors, including Russia’s invasion of Ukraine; the OPEC production cut announced Thursday; and problems at numerous refineries in California simultaneously.
But Newsom said those factors don’t explain the huge gap between prices in California and other states. The price of gasoline started rising even before the price of crude oil shot back up this week.
Americans outside of California are paying roughly half as much for gas. State taxes and fees account for only 69 cents of the roughly $2.60 difference in the average price, according to Consumer Watchdog, an advocacy group that had pleaded with Newsom to call a special session.
Jamie Court, president of Consumer Watchdog, said Newsom “is rightly standing up for Californians who are being taken advantage at the gas pump by a cartel of oil refiners.”
Newsom’s move was cheered by a host of environmental groups, many of whom have long said the governor should use his authority to push back harder against the oil industry and mystery price hikes at the pump.
“We need to get to the bottom of what’s going on here,” said Arnold Sowell, executive director, of NextGen Policy, a climate advocacy group. “If oil companies won’t cooperate voluntarily, the state and appropriate federal authorities should use whatever powers are available to them to get some answers.”
California Democrats have long threatened legal action over alleged gas-price gouging. So far, those investigations and warnings have not led to penalties for oil companies.
But state leaders have taken a series of steps in recent months to help residents cope with higher prices. On Friday, tax filers began receiving assistance in the form of inflation-relief payments, which Newsom and legislators approved in June as part of a state budget deal.
The state is sending onetime payments — ranging from $200 to $1,050 — to eligible residents starting the first week of October. The size of the payments varies based on income, tax-filing status and number of dependents.
Dustin Gardiner is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @dustingardiner