Newsom picks oil czar to watch for price gouging

[Auggie]

Sacramento Bee / August 4, 2023

California has appointed its first watchdog for gas price gouging.

Gov. Gavin Newsom appointed Tai Milder on Wednesday to lead the state's effort to hold oil companies accountable amid spiking fuel prices. Pending Senate confirmation, Milder will direct the newly created independent Division of Petroleum Market Oversight, housed within the California Energy Commission.

Milder is a former antitrust prosecutor at the U.S. Department of Justice.

The division was created as part of Newsom's plan to penalize Big Oil for California's high gas prices. As part of a special legislative session, lawmakers pushed through Senate Bill X1-2 this year following months of high gas prices in the summer and fall of 2022. The bill empowered the California Energy Commission to penalize oil companies for making too much money.

LINK: https://napavalleyregister.com/eedition/page-a2/page_e294b9e8-231f-54e3-94b1-a69fe6db346c.html

Highlights (from the link):

• Newsom originally wanted to establish a profit tax on oil companies and return proceeds to California residents.

• Instead, the Legislature landed on the creation of the new regulatory agency, which will set the acceptable profit margin and decide how to penalize companies that exceed it.

• An average price for a gallon of regular gas in California peaked last June at $6.44. That same year oil companies made record-breaking profits.

• The state has yet to punish any oil company.

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I think the Legislature copped-out -- their plan sounds a bit ambiguous (and more expensive).

Have to see how this plays out.

[intrepidity]

1. Good. Next up: grocery czar. nt

[Auggie]

2. +1

Start with slotting fees, then retail mark-up.

From Wikipedia:

A slotting fee, slotting allowance, pay-to-stay, or fixed trade spending is a fee charged to produce companies or manufacturers by supermarket distributors (retailers) in order to have their product placed on their shelves or within their supply chain.

The fee varies greatly depending on the product, manufacturer, and market conditions. For a new product, the initial slotting fee may be approximately US$25,000 per item in a regional cluster of stores, but may be as high as US$250,000 in high-demand markets.

https://en.wikipedia.org/wiki/Slotting_fee#:~:text=A%20slotting%20fee%2C%20slotting%20allowance,or%20within%20their%20supply%20chain.

$25,000 per item!

[Merlot]

3. "..."set the acceptable profit margin and decide how to penalize"

Which means there is to much latitude and if the right person is not making the decisions, well we know how that will turn out. What does this do for consumers? Oil companies make profits and then have to pay a portion in penalties - which will probably end up being tax deductible.

• Newsom originally wanted to establish a profit tax on oil companies and return proceeds to California residents.

[Auggie]

6. Yeah. I'd say the legislature gummed it up.

[Sneederbunk]

4. How hard can that be?

[MichMan]

5. Just make the acceptable profit margin 0.0000001 %