Gas Prices Stimulus Check 2022: How Has California Reacted To The Record Gas Prices In The State?

Stimulus Check
Stimulus Check

The end of the federal stimulus checks coincided with rising all-around prices. And gas prices have been the worst affected. Prices of gas have been affected by multiple factors that are both local and international and have hugely contributed to the overall high inflation rate.

Based on earnings, gas prices in America have been among the lowest in the world. But things changed after the nation reopened following the pandemic. While critics have blamed the Stimulus Checks and oil companies that are taking advantage of the war in Europe to rake in record profits. 

Governor Newsom Says High Gas Prices In California Are Inexplicable

And residents of California are among the worst hit with gas prices at times even inching closer to double the national average. The rising gas prices and the refusal of the oil companies to ease on the profits have forced Governor Gavin Newsom to call a special legislative session to impose fresh taxes on their profits.

The windfall profits tax proposed to be imposed on the oil companies will be discussed in a December 5 session. It has been timed with the swearing-in of the new State Legislature. It is the same day that a new set of lawmakers will be sworn into the state legislature.

The matter will be a discussion on a different platform from the regular sessions and will focus attention on what the Governor said was the top most priorities for the residents of the Golden State. He said that the inexplicable difference between the national average and the California gas prices has grown to a record $2.5 a gallon.

Gas prices in California have consistently stayed well above the national average. When the national average was $3.89 per gallon, the state average gas price was $6.39 per gallon. Analysts say that shutdowns forced by maintenance issues are majorly to blame for the current support in gas prices. Gasoline in California is a special blend that has been mandated by the California administration. Oil industry people say that the maintenance-related shutdown has constricted the supply of the special gasoline blend.

But Governor Newsom says that the stoppages related to maintenance only hit 6% of offline production. That was not enough justification for the gas prices to spike at the gas pump. The governor said that oil companies were profiting from the adverse situation and were trying to manipulate gas prices and increase profits during these troubled times.

Newsom has termed this gas price gouging by oil majors as the greatest fleecing for customers in history. An oil industry senior official said that California should instead reconsider decades-old energy policies that are outdated and have contributed to high costs in California. He said that another tax will only push up prices further.

Western States Petroleum Association spokesman Kevin Slagle said that the move was a political stunt by the state administration and said that the Governor had timed it to coincide with the elections.

Slagle said that the oil industry is always ready to work out real solutions to the high energy costs in California while at the same time concentrating on reliability. But he said that the oil industry and the California governor have to work out a real solution to the price crisis in the energy sector in California.

Newsom Plans To Levy A Windfall Profits Tax On Oil Companies

Gov. Newsom had originally planned on a windfall profit tax on the oil majors and has compared the other European nations and their tax structure for the oil industry. These nations include the United Kingdom, Spain, and Italy.

The Governor said that the plan was to levy a charge as an excise tax. The excess revenue would be returned to taxpayers as stimulus checks.

He said that it would take a couple of months to get things in order and develop a coherent strategy that can help the Stimulus Check bill move the Legislature more smoothly. A 2-3rd vote in favor by both houses is mandatory to push through any tax measure. This could help face legal challenges.

Gov. Newsom said that he did not believe in being quick, he said that they should instead be deliberative. The proposal suggested by Newsom received the wildest cheers from environmental groups. It remains to be seen the amount of enthusiasm in the Legislature as the Governor has forced through a sweeping package covering climate measures this summer.

The oil industry has already protested one of those climate measures centered around gas and oil wells. Dozens of new legislators will be joining the state Legislature and the first issue before them will be the oil industry tax. 

Decreasing Refining Capacity Due To Stringent Environmental Issues

It has been seen earlier that the unique environmental requirements of the California government are responsible for the high gas prices. Some factors include a particular form of refining to cut smog emissions. The high taxes and the overall excessive cost of doing business in the state have added to their woes.

In recent months refining capacity has further gone down due to the commitment by the state to phase out gasoline-powered trucks and cars and shift to vehicles powered by hydrogen and batteries which could give out zero emissions.

Major oil industries are unwilling to invest in upgrading their production systems when their operations are starting phaseout mandated by the state of California. With this decline in in-state refining capacity decline, California cannot be trusted.

California is losing its status as a self-sufficient fuel island. It has been assailed time and again by the global commodities market and is also facing the added disadvantage of coming up with specially formulated fuel that cannot be obtained from designated petrol pumps.

A Senior Oil Industry Executive Blamed The Policies Followed By The State For The Rising Oil Prices

Vice President Scott Folwarkow of Valero has written to the Energy Commissioncomplaing that the policies adopted by Legislature in California were designed to eliminate the refining sector. He said that California laws force refineries to pay a high carbon tax and also trade fees. The gasoline industry was being forced to be burdened with low carbon fuel standards.

He said that refineries had been forced to shut down their operation. Such a shutdown will in the long run affect the resilience of the supply chain.