All through the recent energy crisis, California Governor Gavin Newsom has been beating the same drum. Rather than admitting that the nation’s current energy policies have been an unmitigated disaster or mentioning his state’s massive tax rates, Newsom has been blaming the “greedy oil companies” for making too much money at the expense of consumers who were paying as much as seven dollars per gallon for gasoline earlier this year. It now appears that he plans to “do something” about it. He called a special legislative session this week and wants the state legislature to impose a “cap on oil refinery profits.” This is an unprecedented move by the Governor that is likely to run into a brick wall in the courts, but it’s at least generating some headlines for him I suppose. (LA Times)

Gov. Gavin Newsom on Monday unveiled an outline of his plan to place a cap on oil refinery profits in California, a proposal he’s asking lawmakers to approve in hopes of reducing future spikes on gasoline prices.

After convening a special legislative session, the governor publicly shared a first look at his plan more than two months after he said he would ask the Legislature to penalize what he called excessive profits by the oil industry, accusing companies of price gouging by intentionally elevating the cost of gas for California drivers.

“California’s price-gouging penalty is simple — either Big Oil reins in the profits and prices, or they’ll pay a penalty,” Newsom said in a statement Monday afternoon. “Big Oil has been lying and gouging Californians to line their own pockets long enough.

This harebrained scheme would create what Newsom is calling a “maximum gross gasoline refining margin.” That translates to a maximum amount of money that he believes oil companies should be able to make when refining oil and selling gasoline and other fuel products. The “cap” would be enforced by having the California Energy Commission impose a civil penalty on the companies and transferring the money into a “Price Gouging Penalty Fund” from which rebates could be sent to residents of the state.

Clearly, someone needs to remind Gavin Newsom that he lives in a capitalist democracy, not an authoritarian dictatorship like China. Making a profit is not a crime in the United States. In fact, our entire economy is based on the concept. Prices and profits are determined by the law of supply and demand, just as they have always been. And they are “capped” by the fact that all of the oil and gas companies compete with each other.

This really should be struck down by the courts almost immediately, assuming the legislature is silly enough to attempt to do this. If they don’t, there will be a predictable result that follows almost immediately. The oil companies in question will pull up stakes and move their facilities to a state with less insane leadership. They will take their jobs and all of the money they already pay to cover California’s sky-high tax rates with them.

If that happens, Californians will be paying even more for gasoline and other fuel products because they will need to be shipped in from further away. As much as Gavin Newsom may wish he could make it so, the fossil fuel industry isn’t going away any time soon. The Biden administration is already reluctantly moving toward increasing domestic oil production rates because the “green energy” approach they’ve been pushing is quickly driving much of the nation to be under the threat of rolling blackouts this winter. And the residents of California have nobody to blame but themselves. They keep electing these loony tune characters like Newsom over and over again. They had the chance to remove him in a recall recently but opted to keep him. So now they’re getting what they deserve and they’re getting it good and hard.