Newsom Lambasts 500% Valero Profit Increase As Gas Prices Soared

CALIFORNIA — Gov. Gavin Newsom took aim at the oil industry again this week, ripping Valero for their 500 percent rise in profits, reported this week.

Valero made $2.82 billion from July to September — up from $463 million one year ago. Newsom's office released a statement on Tuesday, pointing out that such high profits came as record gas prices plagued Californians even after the price of crude oil fell.

“Big oil is ripping Californians off, hiking gas prices and making record profits. As Valero jacked up their profits by over 500% in just a year, Californians were paying for it at the pump instead of passing down those savings,” Newsom said.

The Democratic governor, who's up for reelection next month, reasserted his intention to implement a price gouging penalty to "put these profits back in the pockets of Californians."

More oil companies are expected to release their profit reports in the coming weeks.

While sky-high prices have been paining Californians at the pump for months, the average price for a regular gallon of gasoline fell to $5.67 on Wednesday, down from $5.94 one week ago, according to AAA.

Newsom announced earlier this month that oil refineries could start selling winter-blend gas, a cheaper but more polluting blend. His office said the action brought prices down 11 percent, down from California's record peak of $6.42.

On Dec. 5, Newsom said a special legislative session would be called to push lawmakers to pass a tax on excessive profits oil companies have garnered amid high prices.

The national average was $3.79 on Wednesday and has dropped every day since Oct. 11 due to falling oil prices and fewer drivers than usual, AAA reported.

"Global recession fears coupled with the Biden Administration’s plan to continue tapping the Strategic Petroleum Reserve into December has helped temper oil prices," said Andrew Gross, AAA spokesperson. “This will help take the pressure off pump prices, benefitting drivers and their wallets."

Earlier this month, the Golden State was being hit with a new record price almost every day. The national average price for a gallon of regular gas on Oct. 5 was $3.83, while California's was $6.42. This is "almost unheard of," Marie Montgomery, a spokesperson for Automobile Club of Southern California told Patch then.

But the oil companies may not be entirely to blame, Montgomery also said.

"California gas prices in general are much higher than the national average and are usually the most expensive or second-most expensive in the country because of having the highest gas taxes in the US, an overall higher cost of living in the state," she said.

The state has the highest excise tax rate of .53 cents per gallon, according to a 2022 report from IGEN tax.

California experienced a fuel supply crisis in September after many of its refineries deferred maintenance that would normally have happened earlier in the year to stay open as gas prices reached record levels after Russia-Ukraine war erupted, Montgomery explained.

"They then had to cut production for maintenance in September and there were some that had to do unplanned maintenance, creating an unexpected shortage of the state’s 'summer blend' of gasoline a couple months before the state’s gas stations would normally be allowed to sell 'winter blend' gasoline," she said.

The shortage pushed prices up as much as 10-15 cents a day in the last week of September.

Oil industry representatives have countered Newsom's criticism, saying that it is state regulations that push state prices higher than the rest of the nation.

It's the latest spat between Newsom and the oil industry, which holds political and economic sway in California despite the state's aggressive climate policies. But Newsom's dual actions earlier this month also illustrate the complicated reality Newsom faces as he tries to wean the state off oil and gas while responding to economic reality.

Earlier this year, for example, Newsom's administration turned to generators and power plants that run on fossil fuels to help avoid rolling power blackouts during a heat wave.

By urging air regulators to let oil companies switch to a winter blend earlier, Newsom is acknowledging that state rules play a role in prices, said Kara Greene, a spokeswoman for the Western States Petroleum Association.

The Associated Press contributed to this report.