Top 5 Takeaways From Today’s Hearing on Big Oil’s Price Gouging

SACRAMENTO – Today, the California State Senate hosted the first informational hearing of the special session to pass a gas price gouging penalty and transparency measures.

WHY IT’S IMPORTANT: At the hearing, oil industry lobbyists once again stonewalled on why gas prices soared to record highs last year as oil companies posted record profits.

WHAT GOVERNOR GAVIN NEWSOM SAID: “Today’s hearing provided even more evidence that we need to crack down on Big Oil’s price gouging at the pump. Experts detailed how gas price hikes led to record profits and why we need greater transparency. Big Oil’s lobbyists again used scare tactics and refused to provide answers or solutions to last year’s price spikes. We’re taking action to hold them accountable with a price gouging penalty and long-overdue transparency measures.”

Here are the top things you need to know from today’s Senate Energy, Utilities and Communications informational hearing:

  1. Action is needed to prevent future price hikes. Experts agreed that Californians are getting ripped off at the pump and action is needed to protect consumers, and it was made clear that the Governor’s price gouging penalty is the only viable proposal on the table that doesn’t involve more pollution and more fossil fuels.
  2. The “mystery surcharge” and price hikes bolster Big Oil’s profits. Experts agreed that higher gas prices in California are not chiefly caused by regulations and fees, but instead by the oil industry’s profits like a “mystery surcharge” imposed by the industry on California customers for years. The California Energy Commission’s (CEC) presentation illustrated a record difference in California’s average gas price from the U.S. average, and state refiners made three times more last year than in 2021 and oil companies raked in $63 billion in just 90 days.
  3. More transparency is needed. Over and over during the hearing, it was made clear that more data is needed on Big Oil’s profits and California’s gasoline market, which is exactly what the Governor’s proposal would accomplish – holding the oil industry to the same levels of accountability that other critical industries like electrical utilities already face.
  4. The oil industry advocated for dirtier fuel and more pollution. Big Oil would rather roll back California’s public health and environmental measures than lose any profits – advocating for lower-grade fuels that pollute the air more as their top suggestion to lower prices at the pump.
  5. Big Oil’s big sway. Even in a panel of experts, the oil industry’s influence was on full display, as Senators revealed that 4 of 7 “experts” took money from the oil industry. In fact, Big Oil spent $34 million last year on lobbying in California, with most of those resources directed at fighting to continue to drill in neighborhoods near schools and homes.

HOW WE GOT HERE: Gas prices reached a high of $6.42 per gallon last year, a record $2.61 more per gallon than the national average. This spike in gasoline prices resulted in record refiner profits of $63 billion in just 90 days, disproportionately affecting low- and middle-income families, driving inflation higher and making it harder for California families to make ends meet. The Governor convened a special session of the Legislature in December to pass a gas price gouging penalty and increase transparency into the industry to keep extreme oil refiner profits in check.

HOW IT WORKS: The Governor’s price gouging penalty would discourage oil refiners from fleecing Californians by making it unlawful to collect excessive profits. Excessive refiner margins would be punishable by a civil penalty issued by the California Energy Commission (CEC). Any penalties collected will go to a new Price Gouging Penalty Fund and then sent back to Californians as a rebate.