Washington Gov. Jay Inslee proposes to set up a unit within the Utilities and Transportation Commission to regulate gasoline prices, pushing back at complaints that cap-and-trade is driving up pump prices.

Inslee’s proposal mirrors a plan to limit oil industry profits in California. Washington and California are the only states with cap-and-trade taxes on fossil fuels and would be the only states to cap oil company profits.

U.S. gas prices overall have fallen 11 cents a gallon in the past year, but have risen 20 cents a gallon in Washington, the most in the nation, according to AAA.

The oil industry estimates cap-and-trade adds 50 cents a gallon to gasoline in Washington, almost twice as much as in California, which requires oil companies to reduce greenhouse gas emissions at a slower pace.

At a press conference Dec. 27, Inslee noted Washington gas prices have fallen about 70 cents since peaking in the summer, but also lashed out at oil companies for high prices.

The petroleum industry oversight unit would collect financial information from oil suppliers and distributors and would be a “mechanism to rein in their outrageous prices if they’re gouging us,” he said.

“We just cannot allow these oil barons to foist these gas prices on us and then expect us to have this pollution that our kids have to breathe,” Inslee said.

Western States Petroleum Association spokesman Kevin Slagle said investigations have repeatedly found that market forces set fuel prices.

“This is a political attempt to try to vilify our industry over what is a more complicated market-driven situation,” he said. “What Washington needs to do is buckle down and fix cap-and-trade.”

The governor’s budget proposal for 2024 has nearly $10.6 million split among the UTC, the Department of Ecology and the attorney general’s office for the newly created petroleum watchdog.

The Inslee administration proposes to call the unit the Division of Petroleum Market Oversight, copying the name of California’s agency.

Inslee’s spending plan acknowledges cap-and-trade’s upward pressure on electric bills. The budget proposes to set aside $150 million in cap-and-trade revenue for one-time $200 payments to low-income households.

The state would turn over the money to private and public utilities to distribute. Utilities would be allowed to raise electric rates to cover the cost of handing out the payments, according to the budget proposal.

The California Energy Commission has been holding workshops on capping oil industry profits. Oil companies would be penalized for exceeding the cap, according to legislation authorizing the commission to limit profits.

The petroleum industry warns that interfering with the market will risk fuel shortages and prolong price spikes.

Oil companies may sell less gas to stay under the cap, rather than ramping up production to meet demand, Slagle said. “It’s setting up a situation where you might have decreasing supplies when you need it most.”

California has 15 refineries that produce transportation fuels, according to the California Air Resources Board. Gasoline profits averaged 38 cents a gallon in September, according to the California Energy Commission.

California collects 77.4 cents a gallon in state taxes, while Washington collects 49.4 cents, according to the nonpartisan Tax Foundation, not including cap-and-trade taxes passed down from refineries to customers.

Washington’s average per-gallon price for the least-expensive gas on Thursday was $4.24, according to AAA. The national average was $3.10.