California Governor Gavin Newsom wants to reduce the profits of oil companies operating in the state by limiting their refining capacity, according to legislation introduced Monday in a special session of the state senate.
Thoughts it leaves out important details, including the amount of profit that has been increased and the size of any fees that companies may want to pay for going ahead; Newsom’s office said the details would be discussed later by lawmakers.
The proposal calls the fine a “civil penalty” rather than a tax, an important distinction because it would require a small majority to pass, rather than the two-thirds required to raise taxes.
California motorists always pay more for fuel than other countries because of taxes, fines and environmental laws that other countries do not have, but in October, the average price of a gallon of fuel in the state is more than $2.60, the biggest difference.
The companies most affected by these regulations will be Marathon Petroleum (NYSE: MPCValero Energy (NYSE: VLO), Phillips 66 (PSX) and PBF Energy (NYSE: PBF), recently criticized Newsom for the “politics” of natural gas prices in the state.