California To Punish Oil Companies For High Gas Prices Despite Sky High Gas Taxes, Colorado Will Likely Follow

California has passed a bill that will penalize oil companies for high prices at the gas pump despite having the nation's highest gas taxes -- by far. California’s energy policies, including bans on gas cars and natural gas, often get copied by other states, including Colorado.

March 30, 20234 min read

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California Gov. Gavin Newsom signed a law this week that allows the state to punish oil companies if gasoline prices get too high. 

While California is known for passing energy regulations that would never fly in Wyoming, much of what it does also serves as an example that other states will follow.

California was first to ban the sale of gas-powered vehicles and natural gas connections in new construction. Some Colorado communities are now considering or passing similar regulations, as are other states. 

“To the degree that states like Colorado follow California’s lead, it makes it more difficult for people here,” said William Pendley, who served as acting director for the Bureau of Land Management from 2019-2021. 

Higher Than Hawaii

According to AAA data on Thursday, California had the highest gasoline prices in the country — even higher than Hawaii. 

California has the highest gasoline taxes in the U.S., highly restrictive environmental regulations and gasoline blending requirements that drive up prices. Two Wyoming refineries produce the biofuels that are shipped to California. 

California elected officials and regulators insist that taxes and regulations are unrelated to what Californians pay at the pump. 

“This landmark reform makes California the first state in the nation to authorize a windfall profits cap on oil refiners so that they can no longer gouge consumers at the pump,” Jaimie Court, president of Consumer Watchdog, said in a statement from Newsome’s office. 

A dozen other officials in the release explained how Californians can’t afford gas because oil companies are greedy. 

Wrong Way

Pendley told Cowboy State Daily that the price-gouging law is a string of bad policies coming out of the Golden State. 

“It seems California is going the wrong way on every single issue,” Pendley said. 

Pendley pointed out that in 2019, under the Donald Trump administration, America had achieved energy independence, prices at the pump were low, electricity was affordable and the grid was reliable. 

President Joe Biden has since reversed all that with multiple actions, from canceling the Keystone XL Pipeline to halting quarterly oil and gas lease sales, he said.

“All of those things have conspired to make oil and gas more scarce to drive up the prices,” Pendley said, adding that California’s regulations drive prices even higher at their pumps. 


Ron Stein, a registered professional engineer, energy consultant and resident of California, told Cowboy State Daily that in 2020, he got Republican California Sen. John Moorlach to sponsor a bill that would have created transparency in how much taxes Californians are paying on gas and what those taxes went to. The California Senate Finance Committee killed the bill. 

“The Finance Committee was controlled by Democrats, and they were emphatic. They did not want the public to know those details,” Stein said.

Besides imposing penalties for alleged price gouging, the bill Gavin signed also will investigate profit transparency from California oil refineries.  

Stein said it’s ironic the state doesn’t want transparency with how it spends gasoline taxes, but it demands transparency for oil companies’ profits. 

No American Oil 

Californians pay $1.30 per gallon in fees and taxes on gasoline. According to Stein’s estimations, that comes to about $75 million per day that the government of California is profiting from the sale of gasoline in the state. 

California has one of the largest oil reserves in the United States, yet it produces less than 1% of the crude oil it uses. The rest is imported from Ecuador, Saudi Arabia, Iraq, Columbia and Russia. 

“We’re the only state in America that imports most of our oil from foreign countries,” Stein said. 

He said that in 1995, California satisfied its energy needs from oil produced in the state or imported from Alaska. 

“Governor Newsom is doing everything possible to rid California of oil, from his continuous efforts to reduce in-state oil exploration, and his mandate to not purchase internal combustion engine vehicles starting in 2035,” Stein said. 

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