FAILING ECON 101: California Senate approves first-of-its-kind ‘price gouging’ bill.

The bill would authorize the State Energy Resources Conservation and Development Commission to set a maximum gross gasoline refining margin — and then establish a penalty for any California-based refineries that exceed that margin. The Commission would be required, however, to consider a refiner’s request for an exemption from that maximum margin.

In addition to setting these restrictions, the legislation would require that all penalties collected be deposited into a “Price Gouging Penalty Fund” in the State Treasury.

The bill would also establish the Division of Petroleum Market Oversight within the Commission — operating independently of the Commission authority and providing guidance to the governor on issues related to transportation fuel pricing and decarbonization.

High margins incentivize the increased production needed to bring down prices — and reduce margins.

But California isn’t interested in any of that, just in penalizing oil companies and creating a new slush fund. That part about the commission having to “consider a refiner’s request for an exemption” is a nice way of saying “graft.”