Newsom Signs SBX1-2, Establishing Penalties for Price Gouging on Gasoline

California Gov. Gavin Newsom discusses an outline for what it will take to lift coronavirus restrictions during a news conference at the Governor's Office of Emergency Services in Rancho Cordova, Calif., Tuesday, April 14, 2020. Newsom said he won't loosen the state's mandatory stay-at-home order until hospitalizations, particularly those in intensive care units, "flatten and start to decline."(AP Photo/Rich Pedroncelli, Pool)

Governor Gavin Newsom has signed  a bill that will allow California to be able to penalize oil companies that engage in “price gouging” behavior. In about three months, SBX1-2  will allow the State Energy Resources Conservation and Development Commission to establish a maximum gross gasoline refining margin — and then set a penalty for any California-based refineries that surpass that margin.

The legislation, sponsored by state Sen. Nancy Skinner (D), passed in the State Assembly on March 27, 2023, after receiving the approval of the State Senate last week. Because it came through an ‘extraordinary session’ the bill will be law in 90 days rather than the usual wait until the first of the year.  It also requires that all fines collected be funneled into a “Price Gouging Penalty Fund” in the State Treasury.

The  new law will also create an independent Division of Petroleum Market Oversight. That division will help guide the governor on issues linked to fuel pricing and decarbonization.

Attorney-General Rob Bonta also spoke the press conference, offering  “We’re saying no to price gouging, we’re saying no to market manipulation, and we’re saying yes to consumer protections and accountability and oversight.” 

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