Energy Bills Enforce New York’s Gas Tax Cap and Go after “Big Oil” Windfall Profits

Package better protects consumers from rising prices
June 18, 2008
Assemblywoman Rhoda Jacobs (D-Flatbush) announced the Assembly introduced a package of energy-related bills designed to offset steadily rising and historically high fuel costs.

“Fuel costs today are squeezing everybody to the point that we are approaching an economic crisis,” Jacobs said. “The Assembly Majority understands how serious this is for everyone – for families and small businesses, for the thousands upon thousands of New Yorkers struggling to pay their energy bill or just gas up their car – and that’s why we introduced this important legislation that will help alleviate some of the burden.”

Forcing Major Oil Companies to Pay Up

“In 2006, the Assembly passed a law capping the state sales tax on gasoline at $2 per gallon, but consumers never saw any savings. Instead, ‘Big Oil’ posted record-high profits in 2007 – raking in billions of dollars while draining the pockets of average Americans,” said Jacobs. “This is unconscionable and flat-out wrong, and the Assembly Majority has introduced critical legislation to help ensure major oil companies can’t continue to get away with ‘highway’ robbery.”

The Assembly introduced legislation instituting a recapture and windfall-profit tax provision on “Big Oil” companies with a prohibition on passing the tax on to consumers (A.11590). The revenues would go to a fund that supports energy-savings measures for consumers as well as helping pay home heating bills this winter through the Home Energy Assistance Program (HEAP). The legislation:

  • requires gasoline importers to pay a surcharge equal to 4 percent of the difference between the price of a gallon of gasoline and $2 per gallon; and


  • prohibits the pass-through of this surcharge to consumers and provides for a civil penalty of up to $35,000 per day for any violation of this prohibition.


Based on the forecasted price for gasoline by the Energy Information Association, the recapture provision on “Big Oil” would be expected to generate $406 million. The windfall-profit tax would:

    li>impose a 2 percent gross-receipts tax on very large oil companies that sell their products in New York State, similar to the windfall-profit tax imposed on oil companies in the 1980s; and

  • prohibit big oil companies from passing along the additional costs to customers through increases in the price of gasoline.


Based on the forecasted price for gasoline by the Energy Information Association, the windfall-profit tax would be expected to generate $464 million, said Jacobs. The additional revenue generated by the recapture and windfall-profit tax would be dedicated to enhancing the state’s Low Income HEAP so that more New Yorkers will be eligible, and for energy conservation programs. Currently, the program only serves families making 60 percent of the state’s median income – $28,296 for a family of two or $41,616 for a family of four. The legislation will expand the income eligibility to 80 percent of the state’s median income – $37,728 for a family of two or $55,488 for a family of four.

According to the Office of Temporary Disability Assistance, the average HEAP grant is $350 and eligible families can receive two grants per season – an initial grant and one emergency grant. Assistant Speaker Jacobs added that with oil at over $135 per barrel and rising to all-time record highs, seniors and working families will need added assistance to deal with skyrocketing home-heating costs this winter – this effort will help.

Enhancing Consumer Protection & Efficiency

“It’s absolutely critical that we do everything we can to protect consumers from being taken advantage of,” said Jacobs. “Energy prices have increased up to 75 percent compared to a year ago so we must ensure that everyone is given assistance to reduce fuel costs.”

The package of energy bills includes legislation that will:

  • ensure gasoline pumps dispense the accurate amount of fuel that a consumer is charged for by retailers, ending the phenomenon known as “pump jump” (A.11588);


  • establish a Web site to inform consumers of current retail prices for all grades of gasoline and diesel fuel sold at retail outlets throughout New York State (A.11588);


  • create a database, rating system and test procedures of replacement tires, helping consumers purchase the most energy-efficient tires for their cars (A.10262-B);


  • allow gasoline retailers and distributors to purchase and sell unbranded motor fuel, giving consumers the option to purchase less expensive fuel (A.9073-B); and


  • provide for fleet maintenance, fueling and driving regulations in order to reduce fuel consumed by New York State Office of General Services vehicles; require that all new light-duty vehicles purchased by state agencies – except for police and emergency vehicles – be alternative-fuel vehicles; and require state agencies to make cost-effective purchases of zero-emission or low-emission medium-duty vehicles (A.11589).


Pushing for a National Energy Policy to Combat Bush Administration Failures

The Assembly also introduced resolutions calling for a federal solution to end price-gouging by companies that produce crude oil, gasoline, natural gas and all petroleum distillates. The resolution urges Congress to:

  • create an excess-profits tax for companies that engage in gouging (K.1987);


  • establish additional consumer tax credits to stimulate the creation of innovative, renewable energy technologies (K.1987); and


  • provide additional funding for the Low Income Home Energy Assistance Program to better serve the families that rely on the program to help meet their energy needs (K.1986).


“Taken together, this package of bills represents important steps toward making sure New York families and businesses can not only better afford the costs of living and operating, but that they are not being eviscerated and then hung out to dry by obscenely wealthy oil companies,” said Ms. Jacobs. “This legislation is essential to the financial well-being of New Yorkers across the board.”