Gov. Newsom tries to cap oil companies' profits, but will it create relief at the pump?

SAN FRANCISCO (KGO) -- After months of promising to take on big oil, Governor Gavin Newsom announced Monday that he's reached a deal with Sacramento lawmakers.

Newsom's plan is to create a watchdog group to monitor gas prices and force penalties on refiners for overcharging.

Kevin Slagle is a spokesperson for the Western States Petroleum Association.

"The messages that this governor continues to send to the market about investing in this state. About the long term prospects for maintaining refineries and those sorts of things are troubling at best," Slagle said.

MORE: $4 gas could return as soon as May, GasBuddy projects

Slagle says producing oil and gas in the state is harder here than anywhere else in America.

He points to the state's high gas taxes, as well as other regulations and fees, that ultimately lead to higher prices at the pump.

"California is isolated when it comes to energy markets. We don't have pipelines of crude coming in from other states, we don't have finished products coming in from other states. What we don't produce in California, we ship in from overseas," Slagle said.

But some, like Severin Borenstein of UC Berkeley's Energy Institute at Haas, support the governor's announcement.

Borenstein believes the extra cost goes beyond those regulations, and that Californians are still paying unfairly high gas prices.

VIDEO: Why are gas prices high in California?

Consumer advocates want a tax on oil companies' profits to lower the cost of gas. A trade association for petroleum companies says it won't work.

"Until 2015, our difference from the rest of the country was pretty much explained by that differential in taxes and environmental cost. Since then we've been paying an extra $0.40 a gallon on average, and a total that has amounted to about $48 billion," Borenstein said.

But don't expect any relief at the pump any time soon.

Borenstein says it could takes months or even years before any potential investigation happens.

So for now, it looks like the higher gas prices, could be here to stay.

"In the long run, this extra amount we've been paying is really taking a lot of money out of the pockets of drivers," Borenstein said.

If you're on the ABC7 News app, click here to watch live