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Newsom calls special legislative session with eye toward windfall tax on Big Oil

The governor accused oil companies of raking in "unprecedented profits on the backs of hard-working Californians — nearly $100 billion in the last three months alone.”

 SACRAMENTO, Calif. (CN) — California lawmakers will go back to work in a special session in December to discuss levying a windfall tax on oil companies as residents are again paying record prices for gasoline.

After indicating Thursday that he was considering calling a special session, Governor Gavin Newsom made it official Friday. “Gas prices are too high. Time to enact a windfall profits tax directly on oil companies that are ripping you off at the pump," Newsom said in a statement.

Average gas prices in Sacramento ranged from $5.89 to $6.39 per gallon on Friday, according to a GasBuddy map updated by ABC 10.

In a report released Sept. 30 when he announced the windfall tax proposal, Newsom said oil companies have raised California gas prices “by a record 84 cents per gallon in just the last 10 days” even as crude oil prices dipped.

Gov. Gavin Newsom signed 40 climate action bills Friday in Vallejo, Calif. on Sept. 16. Screenshot via state of California livestream.

“At the end of August, crude oil prices were roughly $100 per barrel, and the average gas price in California was $5.06. Now, even though the price of oil has decreased to $85 per barrel, the average gas price at the pump has surged to $6.29,” Newsom said in his Sept. 30 statement. “Meanwhile, oil companies have raked in unprecedented profits on the backs of hard-working Californians — nearly $100 billion in the last three months alone.”

The special legislative session will take place Dec. 5. 

Newsom's action comes amid what some have called an "escalation" in the governor’s war with the oil industry, as he pushes the state's move toward alternative energy sources.

He signed a new climate plan Thursday in San Francisco alongside other West Coast leaders to commit to prioritizing green energy industries and lead the country on climate action, saying “Eat your heart out, Fox News.” He also ordered the California Air Resources Board to increase the state’s gasoline supply by allowing oil refineries to make an early transition to winter-blend gasoline.

The windfall tax has been proposed before, by Democratic Assemblymember Alex Lee of San Jose, but it failed to move forward according to CalMatters. In a statement, state Senate President Pro Tem Toni Atkins, a Democrat from San Diego, and Assembly Speaker Anthony Rendon, a Democrat from Lakewood, said, “We’ll look at every option to end the oil industry profiteering off the backs of hard working Californians.”

Opposition to the windfall tax and special session has already come from the Assembly Republican leader James Gallagher, from Yuba City, and Budget Committee vice chair Vince Fong, a Republican from Bakersfield. They urged Newsom not to call the special session unless the goal is to cut the gas tax and reduce fees and regulations. Both lawmakers count gas companies and organizations like Chevron, Valero, California Independent Petroleum Association and Marathon Petroleum among their major campaign contributors, according to the nonprofit and nonpartisan research organization Vote Smart.

Gallagher, who frequently criticizes the governor on Twitter, claimed in a statement that high taxes on gasoline are why costing Californians are paying more at the pump than residents in other states.

“Any attempt to deflect away from this reality is insulting to struggling Californians who are well aware that Florida and Texas drivers are paying around $3 per gallon,” he said. 

Fong also said on Twitter: “Newsom/Biden are attacking local domestic oil and natural gas production when we need it most.”

California Attorney General Rob Bonta said he supports monitoring Big Oil.

“Earlier this year, my office warned refineries against taking advantage of ongoing market disruptions, and I want to again be clear: Market manipulation is illegal,” he said in a joint statement with Newsom. “My office is monitoring the market closely, and we will not hesitate to take action if we find evidence that the law is being violated.”

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