Newsom proposes "Windfall" tax on oil companies to bring gas prices back down
Gas prices are rising as crude oil prices fall
Californians are once again feeling pain at the pump. Gas prices are on the rise, even though crude oil prices have fallen to $85 a barrel. To bring the cost down for drivers, Governor Gavin Newsom announced a change Friday to immediately increase the state's gas supply. KTVU's Emma Goss reports.
PALO ALTO, Calif. - Californians are once again feeling pain at the pump. Gas prices are on the rise, even though crude oil prices have fallen to $85 a barrel.
In an effort to bring the cost down for drivers, Governor Gavin Newsom announced a change Friday to immediately increase the state's gas supply.
Californians are paying an average of $6.36 a gallon, according to AAA, the highest price in country. In Santa Clara County, it's nine cents higher, $6.45 a gallon, leading some drivers to seek out the lowest price they can find.
Tim Prior of Palo Alto fills up his SUV at Palo Alto Gas, which tends to have lower prices. On Saturday, a gallon of regular gas was $5.79. Still, Prior expected to pay more than $100 to fill up his tank.
"It's pretty infuriating knowing that oil prices are down, and our prices are still going up," Prior said. "It's pretty ridiculous, especially looking at the rest of the country."
The national average for a gallon of regular gas is just $3.80, according to AAA.
"I definitely feel it," said Tory Hoskins, a Hayward resident. He commutes 60 miles round trip to Palo Alto five to seven days a week.
Relief at the pump could be coming sooner than Thanksgiving, according to some energy economists. Newsom has directed the California Air Resources Board to immediately increase California's gas supply by allowing oil refineries to start making the more cost-effective winter blend of gas a month sooner than usual.
Newsom is also taking on big oil, and proposing a windfall profits tax on oil companies because lately the cost of crude oil has been falling, but prices at the pump have risen 11% in the last week.
"It just doesn't add up. This degree of divergence from the national prices has never happened before. And oil companies, they provide no explanation," Newsom said in a video announcement Friday.
The windfall profits tax would require companies in engaged in the extraction, production, and refining of oil to pay a higher tax on their earnings above a set amount each year, and the recouped windfall profits would be directed to rebates or refunds for California taxpayers.
Newsom’s critics argue that the Windfall profits tax would backfire, and actually restrict oil supply and raise prices on consumers in the long run.
"I need some calculations here to make this equation make sense, because all the calculators in the world can't add this one up, because it's crazy," Hoskins said.