Energy expert says California sudden income tax is a bad idea

California’s implementation of an unexpected tax on oil companies would be harmful, according to an energy expert who spoke with FOX Business.

democratic California Governor Gavin Newsom Last Friday, he called for the imposition of a windfall profit tax on profits in excess of a specified amount for companies engaged in oil extraction, production and refining. The money collected through the tax will then be directed “to rebates/refunds for California taxpayers affected by higher gas prices,” to me Press release from Newsom’s office.

Newsom claimed in a statement that “Crude oil prices fell, but oil and gas companies raised prices at the pump in California.” We will not stand idly by while greedy oil companies spawn California.”

Gasoline price inflation in California

A customer pumps gas into his car at a gas station on May 18, 2022 in Petaluma, California. (Photo by Justin Sullivan/Getty Images)/Getty Images)

The average price of regular gas in California was $6.29 as of Friday, to me AAA. This price has risen 11.3% From $5.58 average price a week ago. Meanwhile, the average price of regular gas nationwide on Friday was about $3.80.

Gas prices move in different directions depending on where you are: Gas Analyzer

Such an unexpected tax would “discourage investment in an industry that desperately needs capital to survive in business in an increasingly hostile government environment,” said Phil Flynn, a contributor to FOX Business and chief market analyst at Price Futures Group. He said.

In April 2021, Newsom signed an executive order aimed at stopping oil extraction in california by 2045. More recently, in August, the California Air Resources Board moved to Requires all new vehicles in the state to operate with electricity by 2025, a policy the governor previously asked regulators to consider.

California Governor Gavin Newsom

California Governor Gavin Newsom (Democrat) at the US Capitol after meeting with House Speaker Nancy Pelosi, Democrat, Friday, July 15, 2022. ((Tom Williams / CQ-Roll Call, Inc via Getty Images) / Getty Images)

“There is this misperception – created in part by Policy The energy companies somehow make a lot of money. “The truth is their profits are higher than in the past, but it fails to put it in perspective of how much these companies have to invest to bring supply to market, and it doesn’t take into account government regulations that have restricted supply that have caused prices to go up either. It also doesn’t take Keep in mind that most of these energy companies in the past were losing money only a few years ago.”

Flynn told FOX Business that the windfall tax called by Newsom is a “blame shift tool” to oil companies “Who are just trying to do their job and keep the market well supplied.” He said it would limit supply and raise prices in the long run.

California Governor Gavin Newsom

California Governor Gavin Newsom unveils the state’s proposed budget for 2022-2023 during a press conference in Sacramento, California, on Monday, Jan. 10, 2022. (AP Photo/Rich Pedroncelli/AP Newsroom)

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While a windfall tax might “look nice to the layman,” Flynn said it would in fact also reduce incentives and investments for oil companies and “choke off” their long-term viability. It can also affect people 401(k) she argued.

“If these companies don’t turn a profit, who is going to invest in their oil stocks?” He said. “And if you have an oil stockpile in part of a 401(k)—whether you know it or not, most Americans know it, they might not even realize—they take money from your 401(k) to pay for their bad policies because those stocks won’t work as well.” “.

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