Newsom’s proposal presents an early high-stakes issue for the new Legislature, which is the most diverse in California history and about one-third of whom are new to Sacramento.
in the oil industry. His announcement came just weeks before the Nov. 8 election.
But the preliminary bill language includes no mention of a tax. Instead, the fines that oil refiners could be charged for exceeding the profit margin cap are considered administrative penalties. That allows the Legislature to pass the measure with a simple majority, rather than the two-thirds vote required for taxes.“That’s not part of my consciousness.
Severin Borenstein, an energy economist at UC Berkeley, agreed that the financial penalties could have a stronger deterrent effect than a tax because oil companies might be more motivated to hold prices down to not appear like scofflaws. But he was doubtful that limiting refiners’ profits would consistently lead to lower prices at the pump.
“That doesn’t require the gas station owners to reduce their price,” said Borenstein, a former chairperson of the California Energy Commission’s Petroleum Market Advisory Committee. If there’s a limited supply of gas, he said, “why wouldn’t they charge a higher price?”
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