Five Things To Read This Weekend
1. For CalMatters, Grace Gedye has an explainer on Governor Newsom’s proposed windfall profit tax:
“Gas prices in California are consistently higher than the rest of the country, thanks to state taxes, a cleaner fuel blend, an isolated gas refining market and more. But in September, California prices jumped even higher and that gap grew wider. Gov. Gavin Newsom pointed the finger at the gas industry when he talked to reporters in early October, saying companies were ‘fleecing’ drivers and called for a new ‘windfall profit’ tax on oil companies.’”
“The logic behind windfall profit taxes is to tax a company at a higher rate when they’re making giant profits — a ‘windfall’ — for some reason not of their own making… Theoretically, taxing extra high profits at an extra high rate should make companies less likely to capitalize on circumstances like war and natural disasters to jack up prices — like a shopkeeper who raises the price of bottled water from $2 to $40 following a hurricane.”
2. “‘They’re screwing you, taking advantage of you. A price gouging penalty to put money back in the pockets of people that are being taken advantage of is not only the right thing to do, it’s the moral and ethical thing to do.” As Maggie Angst reports in The Sacramento Bee, these remarks from Governor Newsom come as:
“… The average price of gasoline in California…[is] nearly $2 higher than the national average …such a significant gap is unprecedented … In its latest earnings report released on Tuesday, Valero reported making $2.82 billion from July to September of this year, up from $463 million during the same period last year – a spike of more than 500%...”
“Jamie Court, president of the non-profit organization Consumer Watchdog [explained that a windfall profit tax] would serve as a ‘deterrent’ for extreme price spikes in the future…‘“When the profits at these levels are seen, they cannot be allowed to be repeated,’ said Court, a leading supporter of Newsom’s proposal.”
3. “As Californians struggle to pay the cost of gasoline and the effects of climate change are felt all over the state, ” the Governor’s moves against the oil and gas industries is just “good politics” the Los Angeles Times’ Taryn Luna writes. Luna explains that Newsom’s …
“windfall tax comes just a few months after he encouraged lawmakers in August to pass a series of bills to harden the state’s climate change laws, which were opposed by the oil industry … Newsom had promised in private to have legislators’ backs if they passed the bills … [The legislature did pass those bills, but] lawmakers could feel skittish about a windfall tax if oil companies pass along that tax, or say they will, to consumers by raising gasoline prices. [So,] any legislative package would likely include some kind of provision to try to prevent that from happening. [Regardless of the specifics of the proposal, this special session vote is a big ask from the Governor for] dozens of lawmakers will take the oath of office for the first time on the same day it starts and a fight with the oil industry [and] will serve as an early litmus test of the new body.”
4. "After Gov. Gavin Newsom vowed to tax their windfall profits, oil companies have spent millions to convince voters to elect their chosen candidates to the Legislature, hoping to stack the deck in their favor,” writes the San Francisco Chronicle’s Sophia Bollag and Dustin Gardiner:
“Tension between the governor and the industry has been building for months, as Californians face skyrocketing fuel prices… Since Oct. 7, when Newsom announced plans to call a special session for lawmakers to consider his tax proposal, oil companies have spent more than $5.8 million to influence eight key races that will determine the composition of the Legislature. The candidates they support come from both parties, and in some cases are Democrats running against other Democrats. Environmentalists say the industry’s flood of spending in legislative races is retaliation, and an attempt to buy support from lawmakers who will decide the fate of Newsom’s proposal… [As] Mike Young, political and organizing director for California Environmental Voters [said], ‘They are shamelessly just trying to buy elections up and down the state.’"
5. Over 50 environmental and civil rights groups have signed an open letter to the state legislature in support of a windfall profits tax:
“We thank Governor Newsom for rightly standing up for Californians who are being taken advantage at the gas pump by a cartel of oil refiners who are making windfall profits at their expense…This is not all a function of pent-up demand from the pandemic, the war in Ukraine, and OPEC decisions. It’s a consequence of five big oil refiners in California who make 97% of the gasoline and have intentionally restricted supply to artificially drive-up prices.”