California to Address Highest-in-the-Nation Gasoline Prices with Special Session of Legislature

A special session of the legislature would address California’s highest-in-the-nation gasoline prices.
California Gov. Gavin Newsom said he would call a special session of the state legislature to address the state’s highest-in-the-nation gasoline prices, including a possible new tax on oil industry profits.

Speaking to reporters in Sacramento, Mr. Newsom said he would call the special session to start Dec. 5, after new legislators elected in November are seated.

“Greed and manipulation, that’s all this is,” Mr. Newsom said of California’s gasoline prices, the only in the nation currently averaging above $6. In cities including Los Angeles, some stations are charging more than $7 for regular unleaded.

Speaking of oil companies, he added, “We mean business and if they don’t believe it, they’re about to find out.” He said he and legislative leaders would consider options including what he described as tax on “windfall” profits.

In a statement, a spokesman for the Western States Petroleum Association trade group called Mr. Newsom’s announcement a political stunt.

“A better use of the special session would be to take a hard look at decades of California energy policy and what they mean to consumers and our economy,” said the spokesman, Kevin Slagle. “This industry is ready right now to work on real solutions to energy costs and reliability if that is what the Governor was truly interested in.”

Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, the oil industry’s trade group, said policy makers should be focused on increasing energy supply to reduce costs and that “imposing new taxes on our industry will do the exact opposite and only discourage investment at a time when it’s needed most.”

Leaders of both houses of the Democratic controlled legislature said they would give strong consideration to any proposal putting “excessive profits” from the oil industry back in the pockets of consumers.

Oil industry analysts said California’s high gasoline prices are caused in part by the state’s stringent specifications meant to combat air pollution, which limit imports, as well as its gas taxes that are among the highest in the nation.

In addition, in September, outages at plants run by Chevron Corp. and Marathon Petroleum Corp. on the West Coast coincided with scheduled maintenance at Phillips 66 and Valero Energy Corp. refineries in the region, reducing the output of petroleum products, industry analysts said.

Mr. Newsom and state regulators said those events don’t explain the increase in California gasoline prices, which recently jumped a record $0.84 a gallon over a 10-day period, according to the California Energy Commission.

The average price of regular gasoline in California was $6.392 on Friday, down about 3 cents from the day before but still about 21% higher than a month ago, according to AAA.

The second-highest state average was Oregon at $5.53. The national average Friday was $3.89.

Calling a special session allows Mr. Newsom to set narrow parameters as to what topics can be addressed and what types of proposals considered.

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