Gov. Newsom signs a bill on his proposed profit penalty plan in Sacramento on March 28, 2023. Photo by Miguel Gutierrez Jr. , CalMatters

(CALMATTERS) – Gov. Newsom’s six-month war of words against the oil industry has finally come to an end. For now.

On Tuesday, the governor at last signed a law that could someday put a cap on oil industry profits, reports CalMatters’ Alexei Koseff, who was at the state Capitol where Newsom gathered alongside legislative allies for the ceremony.

  • Newsomin a tweet: “California now has the strongest oversight and accountability measures on Big Oil of any state in the nation. No more operating in the shadows. No more ripping families off at the pump. Big Oil’s 100 year reign over our politics is coming to an end.”

The measure will require oil refiners to regularly report information, such as data about their operations, inventory and maintenance schedules. It will also create a new watchdog division in the California Energy Commission to look into alleged price gouging by the industry. The division would have subpoena powers, and its findings could result in a profit threshold, one that oil companies could be fined if they were to exceed.

Despite Newsom’s boast that “we proved we can actually beat Big Oil,” the law takes a much more measured approach to the one he originally proposed last September, which started out as a windfall taxthen became a fee, and finally turned into a process that shifts the responsibility to state regulators.

As legislative Democrats raced to approve the bill and get it to the governor’s desk before spring recess, Republican lawmakers and the oil industry criticized how rushed the entire procedure was, and how they weren’t given enough time to vet the full ramifications of the bill. Oil companies, critics suggest, could be disincentivized to produce more gas, which would lower supply and drive costs even higher.

Now that it’s signed, however, the law takes effect in 90 days.

Of course, this won’t be the last we hear about Newsom vs. Big Oil. In addition to the potential financial penalty, oil companies are concerned over the amount of information they have to fork over to regulators, claiming that they may be forced to reveal trade secrets. If their concerns aren’t properly addressed in follow-up legislation, the oil companies may sue.

  • Kevin Slagle, a spokesperson for the Western States Petroleum Association: “We’re concerned about how that all turns out… (But) we’re hopeful that we can shift to having a conversation about the real issue here, which is the supply of fuels.”