New State Watchdog Board to Target Oil Price Gouging

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Gas prices ebbed near $6.30 a gallon at the Chevron station on Novato Boulevard in Novato in 2022.
Oversight division will red flag egregious pricing in state averaging $4.82 a gallon
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Gas prices ebbed near $6.30 a gallon at the Chevron station on Novato Boulevard in Novato in 2022.

State of California to price-gouging oil companies: We’ve got our eye on you.

That was the message this week when the state legislature approved a bill authorizing the formation of a new Big Oil watchdog commission charged with tighter oversight of the oil industry.

The bill, SBX 1-2, passed 52-19 in the state Assembly on March 27 and allows for the creation of a watchdog body—aka the Division of Petroleum Market Oversight—to be operated under the umbrella of the California Energy Commission, which could fine or penalize companies for price gouging if profits exceed certain margins capped by the DPMO.

Some gas prices in the state neared $6.50 a gallon last summer; as the legislation was being considered in the Assembly this week, gas prices averaged $4.82 in California.

Oil companies have for years shrugged off allegations of price gouging in California, where prices can run as much a dollar higher than other states, arguing that environmental regulations and higher taxes are what drive up the price in the Golden State. While legislators concede regulation and legislation can lead to higher gas prices, they say even with that factored in, California’s per-gallon prices are 30 to 40 cents higher than they should be. It’s a gap they say remains unexplained by the oil companies, which regard pricing and operating costs as trade secrets.

The new watchdog body will have subpoena powers and the potential to elicit more information about oil-refinery operations. For those wondering if the legislation could tamper down prices in time for the travel-heavy summer months, don’t get your lead boots out just yet—the formation of the DPMO could take several months.

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