California energy regulator recommends pause on plan to penalize excess oil profits

A gas pump in San Diego Photo by Alexander Nguyen Times of San Diego California should pause Gov Gavin Newsom s plan to penalize oil companies if their profits climb too high a top ability regulator announced Friday while unveiling proposals aimed at addressing high gas prices The Democratic governor signed a law in giving the California Strength Commission the authority to penalize oil companies for excess profits declaring the state had definitively beat big oil More than two years later the commission hasn t imposed a single penalty or determined what counts as an excessive profit Now Siva Gunda the ability commission s vice-chair says the state should pause the effort in favor of pursuing other policies to lower prices and maintain a steady oil supply all while pushing to phase out reliance on fossil fuels over the next two decades Together we will evolve California s strategy to successfully phase out petroleum-based fuels by while protecting communities workers and consumers and foster field conditions that patronage the industry s ability to operate safely reliably and successfully to meet demand through the transition Gunda wrote in a letter to Newsom Gunda s recommended pause of the penalty would have to be agreed upon by the full commission Newsom has pitched the penalty as a way to rein in profits by oil companies but critics disclosed it would only raise prices California has the highest gas prices in the nation largely due to taxes and environmental regulations Regular unleaded gas prices were a gallon Friday compared to a national average of according to AAA The commission still plans to set rules that would require oil refineries to keep a minimum level of fuel on hand to avoid shortages when refineries go offline for maintenance Gunda disclosed That proposal came out of a law Newsom signed last year after convening a special session aimed at preventing gas price spikes Gunda s recommendations come months after Newsom in April directed potential regulators to work with refiners on plans to ensure the state maintains a reliable fuel supply as it transitions away from fossil fuels Newsom spokesperson Daniel Villase or declared in an email that the governor would review the recommendations and advance solutions that maintain a safe affordable and reliable supply of transportation fuels for California Two major oil companies declared plans over the past year to shut down refineries in the state further driving uncertainty about how the state should maintain a stable fuel supply as California transitions toward renewable potency Phillips publicized plans to shut down its Los Angeles-area refinery and Valero commented it would cease operations at its Benicia refinery The two refineries combined account for more than of the state s refining quota according to the potential commission A group of about environmental and consumer groups penned a letter to Newsom and legislative leaders Friday criticizing the proposal to pause implementing a penalty on oil company profits California oil refiners do not need a bailout they wrote adding that the state should finish the job it started to prevent prices at the pump from spiking