New California price gouging rule in effect June 26

June 20, 2023

Keith Goble


A much-ballyhooed effort in California to rein in high fuel prices is set to take effect.

Gov. Gavin Newsom acted earlier this year to sign into law a bill to implement price gouging rules for oil companies. The new rule takes effect June 26.


In November, the governor opened a special session to address concerns about high fuel prices. Newsom has said a spike in fuel prices last fall resulted in record refiner profits of $63 billion in 90 days.

“Big oil is ripping Californians off,” Newsom said in a previous news release. “A price gouging penalty is needed to hold them accountable for profiteering at the expense of California families.”

Statehouse action on price gouging

State lawmakers zipped the governor’s pursuit of new regulations and oversight for oil companies through the statehouse in one week. As a result, the state can punish oil companies for profiting from fuel price spikes.

The California Energy Commission is authorized to decide whether to impose civil penalties on oil companies for price gouging. Specifically, the commission is allowed to set a maximum fuel refining margin with penalties on oil companies for exceeding it.

The commission will also receive information from a new state agency that can require oil companies to disclose financial data. The agency also has subpoena power of oil executives.

Newsom said the new law has “proved that we could actually beat big oil.”

Critics say the new law misses the mark

Opponents contend that California government has contributed to high fuel costs. They cite the legislature and the governor’s refusal to put a moratorium on the state’s fuel taxes.

California rules link taxes on gas and diesel to inflation adjustments each July.

On July 1, 2022, the state increased the 51.1-cent excise tax collected on gas purchases by 2.8 cents per gallon to 53.9 cents. The 38.9-cent diesel rate increased by 2.1 cents per gallon to 41 cents.

Another round of increases is set for the first of July.

At that time, the state excise tax on gas will increase another 4 cents to 57.9 cents per gallon. The diesel rate will increase by 3.1 cents to 44.1 cents per gallon.

California’s average diesel price is 96 cents above the national average for a gallon of on-highway diesel fuel, according to the U.S. Energy Information Administration’s June 12 report. The state’s average gas price is about $1.11 above the national average for a gallon of regular gas.

Additionally, critics contend that fuel in the state is more expensive because the state requires oil companies to make a special blend that is described as being better for the environment. They do not see that situation improving with the new law.

Others question what is next for the state. Some say refiners must make decisions about whether they want to continue to invest in their California facilities or simply shut down their operations. LL

More Land Line coverage of news from California.