Governor Gavin Newsom signed ABX2-1 into law immediately following its passage in the California State Senate and Assembly, which will lead to even higher gas prices. According to the Center for Jobs and the Economy, the legislation is projected to increase gasoline prices by 5 to 15 cents per gallon.
Governor Newsom has framed the law as a solution to control price spikes and stabilize the fuel market. However, industry experts argue that the policy will have the opposite effect. The Business Roundtable criticized the measure, stating, “The math just doesn’t support the claim. ABX2-1 will not save consumers a penny.”
Instead of addressing the economic challenges, this administration targets the oil industry, a critical driver of California’s economy. The new law requires refiners to hold additional fuel in reserve to mitigate the impacts of refinery maintenance. However, is this supposed to happen with refineries running at full capacity and no infrastructure?
Refineries would need to build and maintain additional storage tanks to comply with the mandate, which is expensive, time-consuming, and perhaps impossible in California’s environmental and political environment. This isn't just a technical issue; these costs would likely end up on your bill when you fill up your car.
The mandate will likely result in refiners holding gasoline back to meet the new state requirements. This could lead to an artificial, state-created shortage of fuels, especially during peak driving seasons when demand is high. When there’s less gasoline available in the market, prices typically go up.
California already has the highest gasoline prices in the nation, driven by a mix of environmental mandates and taxes. Observers argue that policies like ABX2-1 will further exacerbate inflation, impacting gas prices and the cost of goods and services statewide.