Newsom targets oil company for profit during gas crisis

California Governor Gavin Newsom continued his campaign to create a new tax for oil companies on Oct. 25, targeting Valero for boosting revenue at a time when consumers in the state were paying record prices at the pump.

The Texas-based oil company released its third-quarter earnings report showing net profit of $2.8 billion from July to September, up from $463 million in the same period last year.

In response to the report, Newsom said oil companies are taking advantage of consumers by making profits.

“Big oil companies are ripping off Californians, raising gas prices and making record profits. While Valero increased its profits by more than 500 [percent] in just a year, Californians were paying for it at the pump instead of passing those savings on,” Newsom said in a statement. “That’s why we’re taking action to implement a price gouging penalty to put those profits back in the pockets of Californians.”

Valero operates two refineries in California located in Benicia and Wilmington. The plants were among four refineries in the state forced to partially shut down this summer for maintenance, contributing to a supply shortage in the state that sent gas prices skyrocketing to new highs in September.

The company did not respond to requests for comment, but said in its quarterly report that global demand was above pre-pandemic levels.

“Refining fundamentals remain strong as demand for products through our system exceeded 2019 levels, while global product supply remains constrained due to capacity cuts and high natural gas prices in Europe are setting a higher floor for margins,” said Joe Gorder, Chairman and CEO of Valero. . “We continue to maximize the use of refining in a safe, reliable and environmentally responsible way to supply essential products.”

Exceptional tax proposal

Newsom called for a special session of the California Legislature to enact a windfall tax on oil companies. The session is set for December 5.

While the details of Newsom’s tax proposal are unclear, the tax would target oil companies that make profits in the state and return the tax proceeds to California residents.

The nonprofit advocacy group Consumer Watchdog backs the governor’s proposal, saying the state’s five oil refiners made up to 10 times more profits off West Coast operations from April to June. than the previous year.

“California have been an ATM for oil refiners for too long and now is the time for the legislature to push back against these outrageous profits,” Jamie Court, president of Consumer Watchdog, wrote in a statement.

However, an industry expert said the additional state tax could end up costing consumers more.

“Generally what happens is that taxes are passed on in one form or another,” David Hackett, a fuels industry expert at Stillwater Associates and a member of the Market Advisory Board, told The Epoch Times. California Energy Commission oil tanker. “In an inflationary environment like this, the governor wants to add more taxes, which will only add to inflation and make it harder for ordinary people.”

California’s record gasoline prices this year have a lot to do with the COVID-19 pandemic, Hackett said.

“It’s another COVID hangover,” he said.

In March 2020, refineries reduced. Many factories have laid off employees and one has closed permanently in Martinez, California. Setbacks delayed maintenance projects and lost money during the pandemic. Then, when the factories started to become profitable, they scheduled maintenance for the spring months of that year. But that’s when the Ukrainian war started, Hackett said.

Instead of resuming maintenance plans, refineries decided to continue operating. By fall, the plants were getting “pretty bad,” he said. But an unexpected and prolonged heat wave hit the state, causing heat-sensitive refineries to slow down due to high temperatures.

The series of events caused prices to rise at the pump.

Prices in California remain high

Gasoline prices in California remain the highest in the nation, in part due to state gasoline taxes and additional regulatory taxes that total about $1.28 per gallon. On Oct. 26, the average cost of a gallon of regular gasoline in the state was $5.68, the American Automobile Association reported.

For every gallon, California consumers pay approximately 54 cents state excise tax, 18 cents federal excise tax, 23 cents state cap and trade, 18 cents for state low-carbon fuel programs, 2 cents for basement. storage fees and state and local sales tax.

Congress responds

California Rep. Kim Young, a Republican, asked Newsom to suspend state gasoline taxes in response to rising gas prices, but has been unsuccessful since.

“Californians pay nearly $6 for a gallon of gasoline in my district, plus an additional $0.54 per gallon in CA gasoline tax. I’ve been urging Governor Newsom for months to suspend the gas tax and I push back on Admin Biden’s efforts to make CA energy policies the national norm,” Young wrote on Twitter Oct. 22.

Other members of Congress, however, favored a national windfall tax and introduced the legislation earlier this year.

In March, California Rep. Ro Khanna, a Democrat, introduced the Big Oil Profits Tax Bill in the House, which would impose an excise tax on crude oil profits on companies that extracted and imported more than 300,000 barrels of taxable crude oil in 2019, or did the same in the current calendar quarter.

The bill requires the federal government to return taxes collected to taxpayers. A bill reflecting this legislation was introduced at the same time in the US Senate by Rhode Island Senator Sheldon Whitehouse, a Democrat.

Internationally, the United Kingdom adopted this summer a temporary tax on the windfall profits of oil companies. The tax will apply to the profits of companies that extract oil and gas in the UK, but not those that generate electricity from nuclear or wind sources. The Treasury expects it to raise around £5bn in its first year.


Previous Argentinian president advocates integration at ECLAC meeting (+Photo)
Next BIO-RAD LABORATORIES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)