Gov. Gavin Newsom (D-CA) announced Friday his plan to call a special session of the state legislature to consider implementing new taxes on oil companies in the face of historically high gas prices.
Newsom’s action comes as the Biden administration is mulling its own response to the 2 million barrel cuts to daily oil production announced by OPEC+ in recent days. Though national gas prices have steadily declined since their summer peak, prices in California remain roughly $2.50 per gallon above the national average.
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The governor said Friday night that the session would begin Dec. 5, one month after the midterm elections, and could potentially seek to implement new profit taxes on U.S. oil companies selling in California.
“Nothing justifies these outrageous and unconscionable prices,” Newsom said Friday. “This is just price gouging.”
“They can’t get away with it. They’re fleecing you. They’re taking advantage of you, every single one, every single day. Hundreds of millions of dollars a week they’re putting in their pockets,” he continued.
The Western States Petroleum Association branded Newsom’s proclamation a “political stunt,” claiming that “if this was anything other,” then he “wouldn’t wait two months and call the special session now, before the election.”
“This industry is ready right now to work on real solutions to energy costs and reliability if that is what the Governor is truly interested in,” the group wrote in a statement.
Newsom is frequently touted as a potential Democratic primary challenger to President Joe Biden in the 2024 election. Biden has warned oil companies for months that he will leverage resources from the Justice Department to investigate any companies suspected of gouging customers amid elevated prices at the pump sparked by the war in Ukraine.
Meanwhile, the Biden administration is attempting to downplay OPEC’s latest round of cuts while contemplating an escalatory response.
“We are looking at alternatives,” the president told reporters Thursday. “We haven’t made up our minds yet.”
National Economic Council Director Brian Deese suggested Biden’s options could include instituting an export ban on American oil, suspending U.S. security support for Saudi Arabia, and supporting the Senate’s so-called “NOPEC” bill. That legislation would revoke the sovereign immunity of all OPEC members, including Russia, and allow the Justice Department to target oil companies in those countries for operating as monopolies. The White House previously opposed the bill when it advanced out of committee shortly after the outbreak of war in Europe.
Like Newsom, Deese similarly ratcheted up pressure on domestic oil companies to pass on savings to consumers.
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“In the very near term, what we believe needs to happen, consistent with market principles, is that the energy companies need to reduce retail prices to reflect the price that they’re paying for the wholesale gas,” Deese said. “The reason why wholesale gas prices continue to be at that level is because of all of the progress that we’ve made.”
