Newsom to call special session to impose tax on oil companies’ profits amid record gas prices
California Gov. Gavin Newsom (D) announced Friday that he plans to call a special session of the state legislature in December to impose a tax on oil companies’ profits as gas prices remain at record levels in the state.
The governor’s press office said in a tweet that Newsom is calling for the session on Dec. 5 to “hold greedy oil companies accountable” with a windfall tax on their profits.
A windfall tax is a one-time additional tax placed on companies when economic conditions result in large profits, according to the Tax Foundation, a think tank.
After gas prices soared to record levels nationwide and the national average surpassed $5 per gallon, the average price dropped consistently for weeks, but prices remained high in California and some other western states.
The American Automobile Association (AAA) reports that the average cost of gas in California is about $6.36 per gallon.
Newsom at a press conference on Friday said that California’s major environmental regulations are not the cause of the high prices. He said all the environmental related costs do not equal the roughly $2.50 per gallon more that Californians are paying for gas than the average American.
AAA states that a gallon of gas costs an average of about $3.90 nationally.
Newsom said most states have gas taxes that average about 30 cents while California’s is 54 cents, which he said does not add up “anywhere close” to $2.50.
“This is just rank price gouging,” he said. “They can get away with it. They’re fleecing. They’re taking advantage of you, every single one of you, every single day.”
He said the oil companies are taking hundreds of millions of dollars per week and then “polluting this planet.”
“It’s time to get serious,” Newsom said about the special session. “I’m sick of them defining the terms, defining the narrative.”
He said the tax will not materialize “overnight” and he expects litigation, but “we’re just trying to get this right.”
“We’re done with them,” he said. “We’re done with OPEC+, the petro-dictators that are out there manipulating markets, manipulating your pocketbook.”
OPEC+, composed of 13 OPEC nations and 11 non-members, announced a decision this week to cut oil production by 2 million barrels per day. The White House has slammed the decision, saying it will increase gas prices.
Frank Macchiarola, the senior vice president of policy, economics and regulatory affairs for the American Petroleum Institute, a trade association representing the oil and gas industry, criticized Newsom’s plans in a statement.
“Policymakers should be focused on increasing energy supply and reducing costs for Americans,” he said. “Imposing new taxes on our industry will do the exact opposite and only discourage investment at a time when it’s needed most.”
— Updated at 10:45 a.m.