The California Senate today passed Governor Gavin Newsom’s special session bill, SBx1 2, to hold Big Oil accountable for price gouging at the gas pumps by a vote of 30 to 8. The measure now moves on to the Assembly.
Although the bill doesn’t authorize the tax on Big Oil windfall profits that was originally envisioned, Consumer Watchdog and other advocates say it is a “landmark measure” to rein in skyrocketing California gasoline prices in the future.
Authored by Senator Nancy Skinner (D-Berkeley) and co-sponsored by Attorney General Rob Bonta, the measure creates “a dedicated, 24/7 independent watchdog” to root out price gouging by oil companies and authorizes a penalty for price gouging, according to a statement from the Governor’s Office.
“For decades, oil companies have gotten away with ripping off California families while making record profits and hiding their books from public view,” said Newsom. “With this proposal, California leaders are ending the era of oil’s outsized influence and holding them accountable. Thanks to the Senate’s quick action, we’re getting this done for California families.”
In a statement, Senator Skinner also celebrated the passage of the bill.
“In 2022, while oil companies were hauling in more than $200 billion in profits, Californians were being hit at the pump with record high gas prices -- $2.61 per gallon higher than the national average,” said Skinner. “Those sky-high prices came at a time when the cost of crude oil was down and there were no changes to our state taxes, fees, or regulations. By passing SBX 1-2 today, my Senate colleagues and I made sure every Californian knows that we have your back.”
Jamie Court, president of Consumer Watchdog, praised the passage of the bill for imposing a watchdog over gas price gouging.
“This bill puts a watchdog over gasoline price gouging and gives it the teeth to stop the gouging,” said Jamie Court, president of Consumer Watchdog. “Californians deserve to know their gasoline prices are not being manipulated and this bill gives regulators the tools to determine when California gas prices are artificially high and penalize oil refiners for it. This landmark law will prevent the gasoline price spikes that have plagued Californians for the last decades.”
Court said SBx1 2 gives the California Energy Commission the power to create a price gouging penalty on oil refiners when they make too much money per gallon at a level to be determined in a rule making.
“The legislation creates new transparency over refinery shutdowns, transactions that compose the crucial spot market where retail prices are set, export and import activity, pipeline activity, and other aspects of the industry that have been shielded from regulators for too long. The bill also creates a new division of the California Energy Commission dedicated to monitoring the market on a daily basis,” stated Court.
“Among the most important provisions of SBx1 2 is the new ledger to be kept for transactions on the gasoline spot market. Regulators will have to be informed of all trades to make sure the crucial spot market — where the price retailers pay oil refiners for the gas is set — is not manipulated,” he concluded.
Elected Officials to Protect America (EOPA) California, representing over 500 elected officials from 49 counties, said it strongly supports protecting consumers from oil price gouging with SBX 1-2 (Skinner). EOPA California has crafted a letter specifically for elected officials to sign in support of the bill. In just six days 132 have signed, and the number is rising daily.
“Families have been forced to cut back on spending and rethink their budgets. I thank Governor Newsom for standing up for Californians who are being taken advantage of at the gas pump by a cartel of oil refiners,” said Eduardo Martinez, Richmond Mayor, EOPA California Leadership Council. ”It’s apparent that this situation is the consequence of the five big oil refiners in California who make 97 percent of the gasoline — controlling the supply to artificially drive-up prices.”
“We live in the shadow of these refineries that spew toxic pollution into the air we breathe on a daily basis. People I represent have died prematurely because of our zip code’s dirty air. Now those same companies are stealing from the people of California. It’s time for the legislature to make SBX 1-2 law,” Martinez stated.
On the other hand, Catherine Reheis-Boyd, the President of the Western States Petroleum Association (WSPA) and the former Chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” in Southern California, slammed the bill for being “rushed” and “misguided.”
“The legislature should not be in a rush to send this bill to the Governor, but should give it the proper process and vetting that a monumental change in energy policy like this deserves,” said Reheis-Boyd in a statement.
“SB X1-2 misguidedly focuses on profits, rather than the root cause of price spikes — shortages and lack of an available supply due to California’s unique fuel specifications and geographic isolation. Price caps, taxes and tax-like penalties do not increase supply or reduce prices, but instead could have the opposite effect,” Reheis-Boyd claimed.
Reheis-Boyd-Boyd engaged in this ‘illuminating’ exchange with Assemblymember Phil Ting (D-San Francisco) yesterday:
Assemblymember Phil Ting: “Could you illuminate why many of the refineries, many of the companies end up earning greater profit in California versus other parts of the country?”
Reheis-Boyd: “It’s a cyclic industry and it goes up, it goes down. And industries, like many, have got to make those decisions based on the long-term planning of being able to be profitable as an entity… this industry’s rate of return is far below the majority of S&P 500’s rate of returns and there’s no conversation about that.”
Ting: “Why is the profit higher in California?”
Reheis-Boyd: “The cost of doing business is higher in California.”
Ting: “So because the cost of doing business is higher, then you want to make a higher profit?”
Reheis-Boyd: “It’s supply and demand…”
Ting: “Why is the profit higher here?”
Reheis-Boyd: “Sorry, Assemblymember, you don’t like my answer but it’s the same one I just gave.”
Ting: “No, I didn’t get an answer, what I got was a lot of generality.”
CalGEM approves a gusher of neighborhood oil drilling permits as total permits soar to over 14,0000
While environmental justice advocates welcomed the passage of the bill by the Senate, they pointed out that the Newsom Administration has continued to issue hundreds of neighborhood oil drilling permits since the beginning of the year. On March 17, climate activists with the Last Chance Alliance held a protest at noon outside the California Natural Resources Agency Building to draw attention to this overt example of environmental injustice on behalf of CalGEM, the state’s oil and gas regulator.
The environmental justice advocates held banners proclaiming, “Rein In Rogue Regulators,” “Gov. Newsom: Climate Leaders Don’t Drill, “and “This Is An Emergency.” They also used props, including an oversized “rubber stamp” and “oil derricks,” to call out CalGEM for rubber stamping oil drilling permits in neighborhoods across the state.
A total of 649 permits have been approved since the start of the year by CalGEM, Of those, 389 permits (60%) were issued inside the health protection zones that would have been created by Senate Bill 1137, according to an analysis by Kyle Ferrar, Western Coordinator of the Fractracker Alliance.
This brings the total number of permits to an astounding 14,374 new and reworked oil drilling permits approved by CalGEM since Jan. 2019, when Newsom took office.
According to FracTracker’s analysis of data from state oil regulator CalGEM, permits were issued within 3,200 feet of Los Angeles, Ventura, Kern, Central Coast and Northern California communities. Download a map of permit approvals within the 3,200’ health protective zone.
Members of Last Chance Alliance recently sent a letter to Gov. Newsom asking him to rescind the permits, stating: “CalGEM approved these permits without any environmental review of the serious harms that are likely to result from these dangerous operations.”
“CalGEM issues rework permits to oil and gas operators who are modifying an existing well. Rework operations are significant sources of pollution that put frontline communities and sensitive individuals at elevated risk of health impacts,” the Alliance stated.
The California Independent Petroleum Association (CIPA) sponsored the referendum that has delayed the implementation of the setbacks law for two years. Filings with the California Secretary of State reveal that oil companies funneled over $20 million to the committee Stop the Energy Shutdown, a “Coalition Of Small Business Owners, Concerned Taxpayers, Local Energy Producers And The California Independent Petroleum Association.
"CalGEM issuing hundreds of permits to negligent oil companies so they can continue drilling in our communities just months after they released an emergency rule to block neighborhood drilling is exactly why we don't trust them,” said Cesar Aguirre, organizer with Central California Environmental Justice Network. “This is exactly the free-for-all that California's oil industry wanted when they bought their way onto the ballot and forced the stay of SB 1137."
The oil and gas industry spent over $34.2 million in the 2021-22 Legislative Session against SB 1137 and other bills they were opposed to.
Although the fossil fuel industry spent a big gusher of money in the latest session, it wasn’t a record session for Big Oil spending in Sacramento. The record session was in 2015-16 when Big Oil spent $36.1 million lobbying.
Big Oil spent a total of $4,220,214 in lobbying expenses in the last quarter from Oct. 1 to Dec. 31, 2022, according to data posted on the California Secretary of State’s website: cal-access.sos.ca.gov/…
The Western States Petroleum Association, the largest and most powerful corporate lobbying group in Sacramento, spent $11,720,912 in the 2021-22 session. They spent $1,734,594 out of the $4,220,214 spent on lobbying by the oil and gas industry in California in the eighth quarter.
Big Oil funds dinners and awards for journalists
The Senate’s passage of the bill comes in the wake of a campaign by the Western States Petroleum Association (WSPA) to fund dinners and awards for journalists. Unfortunately, I’m apparently the only journalist willing to cover this huge, revealing story.
In one of the latest examples of the collaboration between Big Oil and the media, the Western States Petroleum Association sponsored a “media dinner,” in Sacramento on February 28, as part of #BizFedSactoDays.
The flyer for the event states, “Journalists who play an outsize role in shaping narratives about state politics and holding lawmakers accountable will join business leaders to pull back the curtain on how they select and tell stories about California policies, policy and power.”
Featured speakers at the program included Coleen Nelson of the Sacramento Bee, Laurel Rosenhall of the Los Angeles Times, Kaitlyn Schallhorn of the Orange County Register and Dan Walters of Cal Matters.
In a tweet, Catherine Reheis-Boyd, President of the Western States Petroleum Association (WSPA) and former Chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” in Southern California, gushed:
“One of our favorite times of year is #BizFedSactoDays- when @BizFed helps amplify the presence and power of business in California. And we're honored to host the Media Dinner and featured media speakers! @DanCALmatters @LaurelRosenhall@ColleenMNelson @K_Schallhorn”
Then on March 16, the Sacramento Press Club announced in a tweet that WSPA is the new “Lede Sponsor” of the Sacramento Press Club's Journalism Awards Reception: “Thank you to our new Lede Sponsor @officialWSPA! WSPA is dedicated to guaranteeing that every American has access to reliable energy options through socially, economically and environmentally responsible policies and regulations. Learn more more at http://wspa.org”