The State of California is taking unprecedented steps attempting to control rising gasoline prices, which have consistently been among the highest in the nation. Governor Gavin Newsom and state lawmakers say they are trying to tackle this issue by proposing legislative measures that force oil refineries to keep larger reserves of gasoline.
This move by the Newsom administration is allegedly an attempt to stabilize oil supply and prevent price spikes at the pump, especially during refinery maintenance periods, when gasoline production typically drops and prices soar.
One key element of the administration’s plan is requiring oil companies to maintain a minimum reserve of gasoline, ensuring that supply remains steady even during times when refineries are offline. California faces unique challenges due to its strict environmental regulations, which require a specific blend of gasoline that is more expensive to produce. This often leaves the state vulnerable to price surges when refineries are down or there's a shortage of the required blend.
The situation is exacerbated by California’s reliance on a shrinking number of in-state refineries, which means that any disruption in refining can have an outsized impact on gasoline prices. This is particularly noticeable when compared to national gas prices, which have recently fallen while California's have risen.
The so-called “price gouging” is actually being perpetrated by the state, not the oil companies, as nearly $1.25 in extra taxes are added to the cost of every gallon of gasoline purchased in California. Other states do not have such high taxes and fees on gasoline which are designed to fuel climate crisis mitigation programs, reducing Greenhouse Gas Emissions (GHG).
This kind of approach adds to existing tensions between the oil industry and the governor and legislature. Regulations and excessive costs are what drove nearly two dozen refineries out of business in the state over the past few decades. This marks a critical moment in California’s ongoing struggle to balance environmental goals with the immediate economic realities of high fuel prices.
Since the governor officially called the Second Extraordinary Session of the 2023-2024 Legislative Session, several bills of interest have been introduced:
ABX2 1 (Hart; D) Energy: transportation fuels: inventories: turnaround and maintenance.
This bill would repeal the Independent Consumer Fuels Advisory Committee and establish a 6-member Expert Advisory Committee to advise the Energy Commission. The bill would require all members of the committee to hold an academic appointment in or demonstrate expertise in economics or business operations of the transportation fuels market, and would prohibit all members of the committee from having been employed by, contracted with, or received direct compensation from a petroleum related company in the preceding 12 months.
ABX2 2 (Lackey; R) Motor Vehicle Fuel Tax Law: suspension of tax.
This bill would suspend the imposition of the tax on motor vehicle fuels for one year and require that all savings realized be passed on to the end consumer.
ABX2 3 (Gallagher; R) Transportation fuels: gasoline specifications.
This bill would specify that transportation fuels are not subject to regulations implementing a market-based compliance mechanism for greenhouse gas emissions.
ABX2 4 (Patterson, Joe; R) Low carbon fuel standards: regulations.
This bill would prohibit the state board from amending the Low Carbon Fuel Standard regulations prior to January 1, 2026.
ABX2 5 (Lackey; R) Greenhouse Gas Reduction Fund: high-speed rail expenditures: gasoline rebates.
This bill would require the Controller to transfer $3,000,000,000, from the Greenhouse Gas Reduction Fund to the General Fund. The bill would make the transferred money available to provide the owner of every gasoline-powered passenger vehicle registered in the state with a $100 rebate to offset California’s high gasoline prices.
ABX2 6 (Lackey; R) California Environmental Quality Act: expedited judicial review: petroleum storage projects.
This bill would revise the definition of “energy infrastructure projects” to include projects that increase the storage of petroleum products at a refinery meeting certain requirements. Because the bill would impose additional duties on lead agencies in conducting the environmental review of petroleum storage projects certified by the governor, this bill would impose a state-mandated local program.
ABX2 7 (Dixon; R) Energy: gasoline pricing.
This bill would require the commission to post and regularly update a website showing the difference in average gasoline prices in California compared to national average, and California-specific taxes, fees, regulations, and policies that contribute to higher gasoline prices within the state and their individual contribution to the difference in average gasoline prices, and any substantiated evidence of price gouging or other anticompetitive behavior within the petroleum industry and its contribution to the difference in average gasoline prices, as specified.
ABX2 8 (Gipson; D) Air pollution: tanker vessels: at-berth requirements: delay.
This bill would delay the state board’s ability to enforce those requirements with respect to tanker vessels carrying petroleum crude or petroleum products until January 1, 2027, for those vessels visiting the ports of Los Angeles or Long Beach and January 1, 2029, for those vessels visiting any other port in the state.
Only one bill has been referred to a policy committee and set for a hearing, which is ABX2-1 (Hart). It is unknown which additional bills will be referred or set of hearing. Since the supermajority Democrats firmly control the proceedings, bills introduced by Republicans could very well be ignored entirely.
CIPA staff will continue to review all the measures in this “special session” and keep membership posted.