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California Governor Gavin Newsom scored a scaled-back win in his battle with oil and gas companies Monday after the state legislature struck a deal on a proposal to establish a year-round watchdog that will monitor California’s petroleum market on a daily basis.
The new watchdog would have access to new information that oil refiners would be required to report, as well as subpoena power to obtain other data that “could reveal patterns of misconduct or price manipulation,” a step Newsom said will make certain oil companies “play by the rules” or face civil penalties or prosecution by the state Attorney General.
The watchdog would be allowed to impose penalties on oil refiners that charge more than an allowable margin for the price of gasoline, according to the governor’s office.
The bill, which needs a simple majority of the Democrat-controlled legislature to pass, is a shift from Newsom’s earlier goal to impose a windfall tax on oil companies, which would have needed a super majority to be approved.
Gasoline prices in California surged as high as $6.42/gal last year – far above the U.S. average – which helped lift profits of crude oil refiners to all-time highs; the state’s fuel price averaged $4.85/gal Monday, still the highest in the nation.
Companies most affected by the legislation likely would be refiners Marathon Petroleum (NYSE:MPC), Valero Energy (NYSE:VLO), Phillips 66 (PSX) and PBF Energy (NYSE:PBF), which has criticized Newsom for the “politicization” of high gas prices in the state.
