State lawmakers wrapped up their lawmaking business last week and commenced with the Legislature’s annual spring recess. While the state’s legislators are on break our record high gas prices aren’t. Today’s AAA national average price per gallon is $4.114 while California is $5.763 per gallon. The county with the unenviable distinction of having the priciest gas in California goes to Mono County at $6.690 per gallon.
The fuel crisis has squeezed us all and government-proposed lever pulling is starting to shape up.
Last week, the Biden administration said the U.S. would release one million barrels of oil per day from reserves while simultaneously criticizing energy producers for “sitting” on 9,000 unused production permits. Here in California, Governor Newsom has proposed to send up to $800 on state debit cards – $400 per vehicle, capped at two vehicles – to Californians to offset fuel costs. A separate measure, AB 1616, was introduced last week which proposes to send one $400 payment to each taxpaying Californian.
While these modest statewide proposals focus on the short-term, at least they are an attempt to relieve financially strapped Californians. Conversely, legislation has been introduced that – if seen to completion – will exacerbate the affordability crisis.
SB 1301 was introduced by Senator Becker and seeks to impose a tax on fossil fuel-financing entities – like banks and investment firms – based upon how much those entities provide in global financing to specific fossil fuel industries. While the bill is focused on financiers, it clearly intends to choke the liquidity of fossil fuel organizations and make them rely upon their own capital or, alternatively, go out of business. Larger organizations will endure the added cost of doing business and those costs will likely be passed onto California consumers who are already paying the highest fuel and energy costs in the country.
However, many of California’s fossil fuel organizations are small to medium sized businesses that would be unable to frontload new costs that business financing currently assists with. If the intent of the bill is successful, then it would kneecap a vital California industry that provides well-paying jobs for thousands of Californians, and provides a product used by millions daily.
Additionally, many fossil fuel companies are transitioning to green energy and that transition process requires the very capital this bill is attempting to punish. Without these capital infusions, small to medium sized fossil fuel organizations will be unable to transition thereby impeding efforts to get to net zero.
Layering another price increase on entities in the fossil fuel industry, or restricting their access to capital, will continue to exacerbate affordability issues and harm struggling Californians. Given the state’s massive surplus, this tax is unnecessary, and efforts should be focused on how General Fund dollars could be spent on assisting Californians.