BILL SEEKS TO REDUCE GAS PRICES : 2 SENATORS PROPOSE DUMPING STATE TAX.

Byline: Mark Katches Daily News Staff Writer

Charging that oil companies are making excess profits by gouging customers at the pump, two Democratic state senators introduced a bill Monday to permanently suspend the 6 percent sales tax collected on every gallon of gas sold in California.

To make up for the loss in state revenue - estimated at $1 billion - the bill, by Sens. Mike Thompson of Santa Rosa and Dan Boatwright of Concord, would instead force oil companies to pay higher taxes on their earnings in the state.

``It's clear who's profiting, and it is in fact the oil companies,'' Thompson said. ``The motoring public is taking a tremendous hit and from everything I can ascertain, it's been an unjustified hit.''

Based on the current statewide average of $1.47 for a gallon of regular unleaded, the tax break would lower the price nearly 9 cents a gallon and would take effect 15 days after passage.

Since the start of the year, retail gasoline prices have soared nearly 30 percent. Meanwhile, major oil companies have recorded higher earnings in the first quarter ending March 31.

Chevron's profits surged 34 percent to $616 million compared to last year's first quarter. Shell profits were up 42 percent to $483 million and Texaco reported a 30 percent gain to $386 million during the same period.

Oil company executives told the state Air Resources Board last week that the recent dramatic rise in gasoline prices is due to market forces and denied that they are taking excess profits.

Bill Duke, a spokesman for the Western States Petroleum Association which represents the oil industry, said Monday the association will lobby against the bill.

``It certainly sounds like it's bad public policy from the get-go, and we certainly would oppose it,'' Duke said.

Thompson, who is chairman of the Senate Budget Committee, said he will make the bill, SB 14, a top priority with the aim of sending it to Gov. Pete Wilson before the summer.

But it is unclear whether the bill would receive any support from Republican lawmakers, including Wilson, who have made it their mission this year to lower corporate taxes in California.

``I'm usually in favor of cutting taxes, but I'm not in favor of doing this shuffling back and forth,'' said Assemblyman Steven T. Kuykendall, R-Long Beach. ``I think the market is going to resolve the problem we're seeing with gasoline. Trying to create another tax doesn't make that much sense.''

Thompson's chief of staff Ed Matovcik said the senator believes he might be able to peel off some Republican support, especially from rural Republicans whose constituents are paying close to $2 for a gallon.