California governor calls for petrol tax rebate amid record prices at pump

California Governor Gavin Newsom proposed sending money back to taxpayers to offset high petrol prices but rejected calls to increase oil drilling, saying he wants to free the state “once and for all from the grasp of petro-dictators".

The average price for a gallon of gas in California is the nation's highest at $5.44, said the American Automobile Association — a number that is likely to increase after President Joe Biden banned Russian oil imports on Tuesday in response to the country's invasion of Ukraine.

Mr Newsom's proposal, announced during his annual State of the State address, would likely come in the form of a tax rebate. But the governor gave no specifics, saying he will work with legislative leaders "to put money back in the pockets of Californians to address rising gas prices".

Dee Dee Myers, Mr Newsom's senior adviser, told reporters the rebate would likely total in the billions of dollars and be limited to people who have a car. People who are living in the country illegally would also be eligible for the rebate, which could occur as soon as this spring.

Various grades of petrol, with prices above $7 per gallon, are displayed at a Chevron gas station in downtown Los Angeles, California. AP

In a wide-ranging address, Mr Newsom also said that authoritarianism is not only rising overseas, using his election-year speech to offer “a California Way” as the antidote to what he called the "agents of a national anger machine".

Mr Newsom, a Democrat who handily beat back a midterm recall campaign last year, also touted his administration’s progress on homelessness, the economy, education and climate change in a speech to assembled politicians in an auditorium near the state Capitol.

By contrast, last year’s speech was delivered outdoors in an empty Dodger Stadium, which was being used as a mass-testing site for Covid-19.

This year, coronavirus case numbers and hospital admissions are plummeting and the nation's attention is drawn to the Russian invasion of Ukraine and the accompanying spiralling petrol prices.

Republicans nationally and in California want to see the Biden administration increase drilling but Mr Newsom rejected that call.

“Drilling even more oil,” he said, “only leads to even more extreme weather, more extreme drought, more wildfire.”

As he did throughout the speech, Mr Newsom offered “California’s leadership” as the alternative, calling clean energy "this generation’s greatest economic opportunity".

California is one of the nation's most oil-rich states and Republicans, who are a small minority in the state legislature and hold no statewide offices, see high petrol prices as an election year issue they can exploit.

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The state taxes petrol at 51.1 cents per gallon, second only to Pennsylvania, the Federation of Tax Administrators reported.

"Gas prices are out of control. Let's suspend the gas tax, stop using foreign oil and focus on energy independence policies that don't place new burdens on working families," assembly member Suzette Martinez Valladares said in the Republican "prebuttal" to Mr Newsom's speech.

Mr Newsom has also proposed pausing a slight increase in the state petrol tax scheduled to take effect this summer. But Democratic leaders in the legislature have balked at that proposal, arguing it would make it harder to maintain the state’s roads while only providing barely noticeable relief at the pump.

Assembly Republican Leader James Gallagher said his party, while critical of Mr Newsom in other areas, can work with him on the tax rebate.

“If we have nearly a $60 billion surplus in the state, it means that people are overtaxed and we should be giving the voters and citizens of this state back some of their money, especially in the trying times that we're in when the cost of living is through the roof,” Mr Gallagher said.

Mr Newsom has ordered the state to ban the sale of new petrol-powered cars by 2035 and halt all in-state oil drilling by 2045.

He also punched back at Republicans blaming Democratic policies for rising crime, saying California is funding increased crime-fighting efforts but will not “revert to heavy-handed policies that have marked the failures of the past".

Democracy is in danger, Mr Newsom said, speaking on a national scale.

“While we might not have strongmen literally waging war in our country, we are plagued by agents of a national anger machine, fuelling division, weaponising grievance,” he said. “Powerful forces and loud voices — stoking fear and seeking to divide us, weakening the institutions of our democracy.”

Polls routinely show homelessness as one of the most pressing issues for California voters. The state has the largest homeless population in the nation and Mr Newsom has budgeted a record $12bn for various programs and initiatives but encampments still proliferate.

In his speech, Mr Newsom touted his plan unveiled last week to create new Care Courts in each county that could force those with mental health issues off the street and into treatment.