California Gov. Newsom is trying to cap oil companies’ profits, but sees no immediate benefit for drivers

SAN FRANCISCO (KGO) — After months of pledges to tackle big oil, Gov. Gavin Newsom announced Monday that he has reached an agreement with Sacramento lawmakers.

Newsom’s plan is to set up a watchdog group to monitor gas prices and impose fines on refiners for overpricing.

Kevin Slagle is a spokesman for the Western States Petroleum Association.

“The messages this governor keeps sending to the market about investments in this state. The long-term outlook for running refineries and things like that is worrying at best,” Slagle said.

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Slagle says it’s harder to extract oil and gas in the state than anywhere else in America.

He points to high government taxes on gas, as well as other regulations and fees, that end up driving up gas station prices.

“California is isolated when it comes to energy markets. We don’t have out-of-state crude oil pipelines, we don’t have out-of-state finished products. What we don’t make in California, we ship overseas,” Slagle said.

But some, like Severin Borenstein of UC Berkeley’s Energy Institute in Haas, support the governor’s statement.

Borenstein believes that the additional costs fall outside the scope of these rules, and that Californians are still paying unfairly high prices for gasoline.

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“Before 2015, our difference from the rest of the country was largely due to this difference in taxes and environmental costs. Since then, we have been paying an average of $0.40 per gallon more, for a total of about $48 billion. ” Borenstein said.

But don’t expect pump relief any time soon.

Borenstein says it could be months or even years before any potential investigation is launched.

So for now, it looks like higher gas prices may stay.

“In the long run, this extra amount that we pay really takes a lot of money out of the pockets of drivers,” Borenstein said.

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