California Governor Gavin Newsom signed a law that will attempt to combat alleged gas price gouging, Wednesday.

The law allows the State Energy Resources Conservation and Development Commission to set a maximum gross gasoline refining margin, regulating the amount of profits an oil company can make from gasoline sales. The commission will also have the authority to fine companies if it finds it exceeds the gross margins.

“With this legislation, we’re ending the oil industry’s days of operating in the shadows,” Newsom said in a statement Wednesday. “California took on Big Oil and won. We’re not only protecting families, we’re also loosening the vice grip Big Oil has had on our politics for the last 100 years.”

SBX1-2 was presented by California Senator Nancy Skinner and was passed by the California Senate Thursday. The bill then passed the state assembly by a 58-19 vote, before heading to Newsom’s desk to sign into law.

“California has sent a clear message to the oil industry,” Senator Skinner said. “Open your books and prove you’re not price gouging, otherwise Big Oil will pay the price — not consumers.”

By California law, oil companies have been required to submit monthly reports to the state, outlining its gasoline refining and production. That is where the commission evaluates an oil company’s margins.

If a company is fined, the money will go into the “Price Gouging Penalty Fund,” with the law stating it will be :used to address any consequences of price gouging on Californians.”

In 2022, the state of California saw historically high gas prices in the midst of tense global affairs and summer travel.

The state saw a peak average of $6.43 per gallon for regular unleaded on June 14, 2022 and Los Angeles County seeing an even higher average of $6.49 per gallon on October 5, 2022.

Prices have decreased since the 2022 highs, although California still sees an average of $1.36 higher than the national average, with 54 cents per gallon coming from a state gasoline excise tax.

The new gas law will take effect this summer, June 26. In 10 years, the California State Auditor will be tasked with determining if the possible penalties worked in reducing dramatic gas price increases, and provide a report on June 1, 2033.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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