Bill SBX1-2, gives the California Energy Commission the power to set a price cap and impose penalties through a regulatory process if it decides that oil companies are making excessive profits and that a penalty will not result in higher prices for consumers.

The Democratic majority handed Newsom his bill, but support wasn’t overwhelming within his own party. The proposal passed 52-19 in the Assembly, with several Democrats declining to vote, and with a stronger 30-8 vote last week in the Senate.

Democratic lawmakers hailed the bill as an improvement from the prior version. Several were careful to point out that the legislation prohibits regulators from imposing any limit on profits that could drive up gas prices, underscoring concerns about potential unintended consequences of capping the industry’s earnings.

Republicans criticized Newsom and Democrats, arguing that the legislation will hurt Californians.

“This bill is a senseless attack on domestic energy production that will only harm hardworking Californians in the field by creating a hostile business climate,” said Assemblymember Vince Fong (R-Bakersfield).

Western States Petroleum Assn. argues that prices are higher in California as a result of the state’s policies to limit gasoline production.

California relies on about five main oil refiners to produce gasoline, which means the state is isolated from alternative backup sources, and maintenance issues can reduce supply and cause price spikes.

Our take: Price caps result in either higher prices or shortages–always; and corporations don’t pay taxes or penalties, they pass the costs on to consumers–always. This bill is just one more misstep by California’s politicians that will end up hurting just one group: consumers.

Excerpts above from the Los Angeles Times article available HERE.