Recent comments made by Democratic California Governor Gavin Newsom, who has blamed “greedy oil firms” for the state’s high gas prices, have drawn harsh criticism from economists and oil market specialists. Newsom tweeted on Monday that gas costs are increasing as oil firms are making record profits. “It just doesn’t make sense. The oil industry’s price gouging at the pump must end.”
Newsom has been making this case for weeks, most recently saying in a video message released by his office at the end of last month that he would back a new windfall tax on oil firms to punish “oil corporate extortion.” The state legislature is unlikely to submit a bill to change the tax system in this way for several more months. Despite being an oil-producing state, California has higher expenses for housing, food, energy, and practically everything else. However, petrol is particularly pricey compared to the rest of the country, costing around $2 more per gallon. Tuesday’s national average was $3.85, but California had a higher average of $5.94, according to AAA.
Some people could believe it, but I believe that people are growing weary of this tale, according to Kreutzer. In California, it appears that price gouging is a constant. “Well, what’s California doing different today?” is a necessary question to ask. They have a lot of stupid policies.
According to Kreutzer, there are too many restrictions, a 54 cent per gallon gas tax, and a reluctance to build more refineries as the major causes of the high pricing. This includes developing a unique blend of cleaner gas for the summer, when people drive more. To solve it, Newsom has called for a special legislative session and has been blaming the oil industry for the sudden surge.
Gas prices are rising even as oil firms are making record profits. It. Doesn’t. Stack. Up. We can’t keep letting opportunistic oil giants gouge us off at the pump,” Newsom tweeted.
In April, the legislature sought to impose a tax on oil firms. However, the response was strong, and the measure was suddenly removed. The anti-Big Oil rhetoric was substituted for the Republican proposal to impose a moratorium on gas taxes.
In a film about “oil corporate extortion,” Newsom has brought the tax concept back to life. Republican party members worry that such a levy would be passed on to consumers.
According to American Enterprise Institute economist Benjamin Zycher, the claim that refineries or oil firms are profiting from California’s market circumstances should not be taken seriously. Why did they not act in that way ten, twenty, or five years ago? “Market factors paired with the erroneous state policies,” he said, “are to blame for the high pricing.”