• California passes new oil bill seeking to penalize oil companies profiting from stated limits
• Gov. Gavin Newsom approved the bill on Monday following a quick process that lasted only a week
• Oil companies have already spent millions of dollars opposing the approval of the bill

California Gov. Gavin Newsom passed a new oil bill that seeks to penalize oil companies if they go over the given profit limits in an attempt to curb the rising prices of gas across the United States.

The approval on Monday marks the country's first penalty for oil companies' price gouging at the pump. It gives regulators the authority to penalize oil companies for profiting from the gas increases that have exacerbated the suffering of the people from the most populous state in the US last summer.

California's New Oil Bill

Democrats who are in charge of the state Legislature quickly worked to pass the bill on Monday, only a week after the bill was introduced. It was seen as an uncommonly fast process for such a controversial issue. This is particularly true for one opposed by the powerful oil industry that has already spent millions of dollars to prevent the bill from being approved, as per Fortune.

Newsom took advantage of his political position to pass the bill, which grew out of his call last December for a special legislative session that sought to pass a new tax on oil company profits. This was when the state's average gas price hit a record high of $6.44 per gallon.

In a statement, the California governor said big oil companies had taken advantage of consumers for years. He said the Legislature found the courage, conviction, and backbone to stand up against the oil industry.

On the other hand, legislative leaders rejected Newsom's initial call for a new tax on oil companies, fearing that it would discourage supply that would result in higher gas prices. A compromise was reached between the governor and other lawmakers, giving the California Energy Commission the power to decide whether or not to penalize companies for price gouging.

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Penalize Price Gouging

The bill authorizes creating a watchdog agency at the CEC that would mandate oil companies to provide information regarding the industry and potentially set limits on profits as well as a penalty on those that go beyond the cap, according to The Sacramento Bee.

A Democrat from Southern California, Assemblymember Pilar Schiavo, said there was no other explanation for historically high oil prices other than greed. During a hearing in Sacramento, the official said that the issue is that there is no information to prove the claim and that authorities had no power to penalize the level of price gouging seen last year.

During an interview last week, State Sen. Nancy Skinner, who authored the bill, said that officials would not be able to respond if there are any price spikes in the next few months. She noted that a good portion of the new bill is new disclosures that would be implemented on oil companies, said the Mercury News.

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