Newsom Wants to Tax Big Oil; Big Oil Fires Back

Gavin Newsom

( – The Valero Energy Corporation, one of America’s largest fuel manufacturers, has hit back at California’s Democrat administration after state officials accused oil refinery operators of “price gouging.”

Valero’s strike back at California came as the state’s Governor, Gavin Newsom, announced he plans to pass a new tax on oil companies’ profits precisely as a punitive measure for “rank price gouging.”

In a recent letter to oil company executives, David Hochschild, the chairman of California’s Energy Commission (CEC), demanded an explanation as to why the state’s gas prices have spiked anew even as crude oil prices have plummeted.

“[C]rude oil prices are down, and industry profits are up, yet gas prices have increased by a record $0.84 per gallon in 10 days in California – a $2.50 difference compared to U.S. prices,” Hochschild wrote on September 30.

“This degree of divergence from national prices hasn’t happened before, regardless of planned or unplanned refinery maintenance, and no explanation has been provided. The oil industry owes Californians answers,” the CEC chief added.

He accused the oil company executives of failing to offer an “adequate and transparent” explanation for the latest gas price spike.

Hochschild also argued that the price situation had worsened by the industry’s “lower-than-normal” gasoline stockpiles.

A scathing response to the accusations from California’s administration came at the end of last week by Scott Folwarkow, Valero’s Vice President of State Government Affairs.

The executive rejected any “price conspiracies” among oil refineries, reminding that a federal judge recently killed a case involving similar accusations.

Folwarkow argued that the California market is burdened by “government-imposed costs and specifications.”

At the same time, he blamed low inventories on post-COVID’s growing demand and limited supply, as cited by Fox News.

The Valero executive said California’s much higher gas prices had to do with the state being the “most expensive operative environment in the country and (being) a very hostile regulatory environment for refining.”

“California policy markers have knowingly adopted policies with the expressed intent of eliminating the refinery sector. California requires refiners to pay very high carbon cap and trade fees and burdened gasoline with cost of the law carbon fuel standards,” Folwarkow declared.

He insisted the policies of the state administration have made it challenging to increase refining capacity while also preventing supply projects from lowering the operating costs of refineries.

“Adding further costs, in the form of new taxes or regulatory constraints, will only further strain the fuel market and adversely impact refiners and ultimately those costs will pass to California consumers,” Valero’s VP warned.