Elected officials and coalition groups urge the Legislature to enact price gouging bill

EOPA California says: It’s time for oil industry transparency and accountability and that starts with SBX 1-2

March 22, 2023

By Ramona du Houx

On March 16th, Governor Gavin Newsom met with leaders representing a coalition of hundreds of organizations, stakeholders and local leaders to unveil a proposal to hold Big Oil refineries accountable for price gouging consumers. Senate and Assembly leaders and working groups endorsed the new language in the proposed bill, SBX1 2. Today, March 22, it went before the Senate’s special energy committee ahead of a potential floor vote on Thursday, which would shift the action to the Assembly as early as next week.

SBX1-2 now includes the creation of a new independent watchdog within the California Energy Commission (CEC) charged with monitoring California’s petroleum market on a daily basis to ensure market participants don’t break the law.

“We know the effects the oil industry’s price gouging had on our communities and it must stop. By creating an oversight committee, we are letting Californians know that they will not be taken advantage of at the pump anymore,” said Irvine Mayor Farrah Khan, who attended the meeting where Newsom gave a briefing on the new proposal with former Culver City Mayor Meghan Salhi-Wells of Elected Officials to Protect America (EOPA) California.

EOPA California, representing over 462 elected officials from 49 counties, strongly supports protecting consumers from oil price gouging with SBX1-2. EOPA California has a letter specifically for elected officials to sign in support of SB1-2 (Skinner). In just five days 108 have signed, and the number is rising daily.

“Last year, while crude oil prices were dropping, gas prices were rising a record 84 cents per gallon in just 10 days. The blatant audacity of the oil industry is unconscionable. We urge action to bring justice and security to the people of California with the enactment of SBX1-2,” said Meghan Sahli-Wells, Former Culver City Mayor, EOPA California Director. “Too many people have been forced to cut back on necessities just to fill their tank for their working commute. The unprecedented spike resulted in record refiner profits of $63 billion in just 90 days, disproportionately affecting low and middle-income families, driving inflation higher and making it harder for California families. The industry’s corporate greed has gone too far.”

“The oil refining companies in California are hauling in record profits that are being used to increase dividends for shareholders, give outlandish salaries and bonuses to company executives, and to buy back their own shares,” said Bill Allayaud, Director of Government Affairs in California for Environmental Working Group.  “We are urging the California Legislature to take bold and swift action to put the Governor’s plan into law.  That is the best and most responsible course to take right now as the oil companies continue to manipulate the price at the pump.”

Igor Tregub, former Berkeley Rent Stabilization Board Member, Ukraine native and EOPA California Leadership Council member, testified.

“The oil industry is using Putin’s war in my homeland as a shield to hide their price gouging of consumers across America. In California their refineries made it even more egregious by doubling the price of gas — hiding behind myths. Refinery pre-scheduled maintenance is not a credible explanation for the sudden $1.54 increase in what refineries charge for every gallon of gas Californians buy. Enough is enough,” said Tregub. “We stand with the people of our state and urge the enactment of SBX1- 2 to hold Big Oil accountable for price gouging consumers.”

"Here in the Valley we have some of the worst air and health outcomes in the nation, and our residents have some of the highest rates of poverty in the state. Greedy price gouging disproportionately harms our low-income communities and communities of color. We need to reign in Big Oil and protect working-class families here in California. Legislators I urge you to support this bill and put people above profit. I urge you to put families before refineries, and I ask you to prioritize Californians instead of the complicities of the oil industry,” said Randy Villegas, School Board Trustee, Visalia Unified School District, in his testimony.

Oil companies have failed to provide a credible explanation for the divergence between prices in California compared to the national average. Some industry spokespeople have blamed it on five refineries temporarily shutting down at the same time. But this has happened in the past without prices at the pump skyrocketing anywhere near this degree. In September 2019, five refineries experienced unplanned maintenance issues, and California was faced with several refinery outages. The price spike was a mere 34 cents — a fraction of what Californians have been paying.

“Big Oil raked in $200 billion last year with no regard for how their gas price increases hurt communities that were already suffering from inflation, and the dangerous effects of fossil fuel pollution on our health and climate,” said Alex Walker-Griffin, Hercules Mayor, veteran, EOPA CA Leadership Council. “People deserve justice from this price gouging which became twice as bad in California with gas prices doubling. Big Oil’s unfettered greed needs to be reined in. We call for immediate legislative action with SBX1-2 becoming law to hold them accountable.”

The dramatic price hikes in California could not be attributed solely to refinery maintenance issues, weather, OPEC, state taxes that remained unchanged or the ludicrous idea that there is a supply shortage in a pumping rich refinery state.

“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. 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,” said Eduardo Martinez, Richmond Mayor, EOPA California Leadership Council. “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 SBX1-2 law.”

According to a 2023 poll by David Binder Research, 66 percent of all California residents support a Price Gouging Penalty. The same poll found more than half of California residents believe that greed is the root cause of increased gas prices, rather than excessive regulations.

“This price gouging bill is important for our democratic society. We need to look out for our people, who should always be more important than excessive oil industry profits,” said Steven Hernandez, Coachella Mayor. “People have struggled to pay rent, and medical expenses because of these gasoline price increases. This is a matter of fairness to the families who live paycheck to paycheck. I urge the legislature to pass the measure into law.”

The new CEC division will provide independent oversight and analysis of California’s petroleum market to protect consumers from ongoing price gouging by refiners.

“We need oil industry transparency. Without it their actions have shown profits are their main interest, not the well being of the people of California. The Intergovernmental Panel on Climate Change report made it transparently clear that without oversight the oil industry will continue to pollute the planet with their fossil fuel products, despite worldwide deadly climate disruptions,” said Heidi Harmon, former San Luis Obispo mayor, EOPA California Leadership Council Co-chair. “Here, our California Energy Commission will monitor the oil refineries that took advantage of our most vulnerable frontline populations and will hold them accountable. The legislature needs to make SBX1-2 law. Then this landmark legislation can be used as an example for others to follow.”

More about the bill SBX1-2—

The new CEC division would have access to new information required to be reported by refiners, subpoena power to compel production of other data and records that would reveal patterns of misconduct or price manipulation, and direction to refer violations of law to the Attorney General for prosecution.

Additionally, the CEC would be authorized to set a price gouging penalty via a public rulemaking process, to hold Big Oil accountable for making excessive profits at the expense of Californian families. The CEC would establish a penalty structure that deters excessive pricing by imposing a civil penalty on refiners who charge more than a maximum allowable margin for the price of gasoline.

The new proposal also enhances the state’s authority to analyze why California has seen unexplained higher gas prices since 2015 – sometimes referred to as the “mystery gasoline surcharge.”

Background History—

By the end of August 2022, even though the price of oil decreased to $85 per barrel, the average gas price at the pump in California surged to $6.43 per gallon, and in some locations was over $7 within a little over a week. That led to Governor Newsom to say oil companies should be held responsible for “fleecing” customers and called for a special Legislature session. In November, all five major oil refiners refused to attend a state hearing to investigate the unprecedented spike in gas prices.