Governor Newsom’s Gas Tax Scheme Passes Assembly – But Not Without a Splendid Fight
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californiaglobe.com/articles/governor-newsoms-gas-tax-scheme-passes-assembly-but-not-without-a-splendid-fight/Katy GrimesMarch 28, 2023
UPDATE below: The California Assembly hosted a side show Monday, when after jamming SBX1-2, Gov. Gavin Newsom’s Gas Tax, through an expedited hearing earlier, pretended that was enough exposure to the public, and debated the bill and voted on it.
Gov. Gavin Newsom’s Gas Tax, as it is being called in some circles, would create a new panel of unelected bureaucrats with subpoena power, to investigate oil and gas companies, impose penalties, new costs and regulations, which would inevitably lead to gas shortages, rationing and price spikes. The bill creates a new government agency to arbitrarily decide how much profit oil and gas businesses are allowed to make, disrupting California’s energy market and threatening the reliability of the state’s fuel supply, according to Assembly Republicans.
The governor’s scheme is to “create a new independent watchdog within the California Energy Commission charged with monitoring California’s petroleum market on a daily basis to ensure market participants play by the rules.”
Like something out of Venezuela, where the oil and gas industry were nationalized, the amended bill actually states:
This bill would authorize the commission to establish a maximum gross gasoline refining margin at an unspecified amount per gallon and would authorize the commission to annually adjust the maximum gross gasoline refining margin, as provided.
The bill would require the commission, if the commission establishes the maximum gross gasoline refining margin, to establish a penalty for exceeding the maximum gross gasoline refining margin, as provided. The bill would authorize the commission to petition the court to enjoin a refiner from exceeding the maximum gross gasoline refining margin. The bill would also authorize the commission to assess impose an administrative civil penalty on a refiner for exceeding the maximum gross gasoline refining margin.
Democrat Assembly leaders and members however, also received a lesson in Econ 101 and Civics.
Assembly Republican Leader James Gallagher asked Assembly colleagues why they would allow Gov. Gavin Newsom to drive state policy with his bill, which was only in print one week. While the Extraordinary Legislative Session was called back in December 2022, ostensibly to address the “windfall profits” of the oil and gas industry in California, according to Gov. Newsom, there has been plenty of time to openly debate how to address the governor’s concerns, as well as hear from the oil and gas industry.
As California Globe contributor Chris Micheli recently addressed, “For those watching the Senate and Assembly Floors on Thursday, March 23, 2023, one bill jumped through several procedural hurdles in a single day. The bill is SBX1-2 (or SB 2x) dealing with the maximum gross gasoline refining margin. It is a special session (in the First Extraordinary Session) bill.”
“Because SB 2x is a special session bill, it is not subject to a number of legislative rules,” Micheli explained – which explains the antics.
However, Republicans duly noted that Democrats and the governor have had 6 months to present the bill in various committees and debate its merits. “You are about to vote on a bill in print one week,” Assemnbly republican Leader Gallagher said. “We’ve been in extraordinary session six months.”
“You are allowing the governor to drive policy, and not the Legislature,” Gallagher said. “He doesn’t care about our ideas. The whole time we’ve heard one idea – his. No other bills or ideas got heard – there was no discussion.”
“You’ve gotten a week. What kind of process is this?” Gallagher asked incredulously.
“Stand up for yourselves – We make the policy,” Gallagher added.
He said the Assembly could continue to hold the extraordinary session and listen to all of the ideas and proposals. And he noted at one hearing on an earlier version of the gas tax increase, Berkeley and Stanford experts agreed the policy would lead to higher prices.
“Democrats have spent years driving up the cost of gas with a steady stream of taxes, fees and regulations. This bill is no different,” said Gallagher. “When we see gas lines and soaring prices, Democrats will have only themselves to blame, and I’m confident that Californians will hold them accountable. If Democrats were serious about lowering gas prices, they would back our efforts to give drivers a gas tax holiday.”
Assemblyman Bill Essayli (R-Riverside) said that it is California policy driving up gas prices. And he noted that is exactly what Democrats want – to drive up gas prices enough, that people are forced out of their cars and onto public transportation. “I’m saying the quiet part out loud, that the state wants to drive people away from gas powered cars,” he said.
“Interest groups want people out of their cars,” he added, noting that most of the bill’s supporters are environmental justice and climate change groups.
Today California imports about 75% of the oil we consume. In 1982, California had 43 operational oil refineries and a population of nearly 25 million; today we have 11 operational oil refineries and a population of nearly 40 million.
Ironically, Essayli said that the California Energy Commission, which will oversee the new oil and gas regulatory commission, can’t even manage California’s electricity prices. “If the CEC can demonstrate they can bring down electricity prices, then maybe we give them this.”
Essayli also noted that if it’s excess profits Democrats have such a problem with, Gov. Newsom’s own state budget is exceedingly larger than last year’s, and the year before, and the year before. “What about government excess profits?” he asked.
Assemblyman Vince Fong, a Republican who represents Kern County and the oil industry said, “With little public input, the Governor jammed his proposal that demonizes domestic energy production in our state – a policy that will only harm hard-working Californians. By creating a hostile business climate, the Governor is putting Californians out of work and will make California more dependent on foreign sources of oil and natural gas.”
As one oil and gas industry expert told the Globe recently, “Currently, the convenient scapegoat for all our pain at the pump is Vladimir Putin. Well, historical facts in California paint a different picture. California set it’s record for the retail cost of gas in June of 2008 at $4.53 a gallon, according to the Energy Information Agency (EIA), Global oil averaged $131.00 a barrel that month. In October 2012 we hit that cost of gas again but crude only averaged $103.00 that month. We broke that all time record, not when Putin invaded Ukraine, but on November 15, 2021, when crude oil averaged $82.00 a barrel- more than 3 months before the invasion of Ukraine. The prices of gas and diesel have continued to climb since that day.”
When it came time for the entire Assembly to vote, SBX1-2 passed 52-19 on the floor.
Assemblyman Health Flora (R-Ripon) made a motion to lock the roll vote, and not allow any add ons, which is typically happens when not all members cast a vote during the floor debate and voting. His motion didn’t pass but as the Globe Tweeted, remember these votes:
We will follow up and report who changes their vote, or adds on.
UPDATE March 27, 2023: The final vote was 58-19 with 3 non-votes. The 6 add-on votes were Assembly members Mike Gipson, Stephanie Nguyen, Cottie Petrie Norris, Freddie Rodriguez, Avelino Valencia, and Carlos Villapudua. One Democrat voted no: Assemblywoman Jasmit Baines.
For more information, read: Gov. Newsom’s ‘Stronger Proposal to Hold Big Oil Accountable’ is Full of Organic Matter
