California legislators on both sides of the aisle voiced concerns during a Sept. 26 committee hearing on proposed regulations that would affect gasoline prices in the state.
After clearing the Petroleum and Gasoline Supply Committee on a vote of 13 to 2, the bill will next be heard on the floor of the Assembly on a date to be determined. If passed, the bill could lower prices by as much as 10 cents per gallon, according to supporters.
One Democratic lawmaker noted that newly proposed rules from the California Air Resources Board set to take effect in 2025 would raise gas prices by 45 cents a gallon.
“I am concerned over the additional [clean air] regulations that will increase the gas prices,” Assemblywoman Blanca Rubio, member of the gas supply committee, said during the hearing. “Because if we’re doing all of this so we say this is going to lower gas prices by 7 to 10 cents, and then come January, and our other regulations increase it by 45 cents, then we’re all going to look like fools.”
“This is my eighth year here, and we’ve passed regulations with the hopes and dreams that [gas prices will be lowered], and it hasn’t translated,” Rubio said. “We can’t live on hopes and dreams. We need to ensure that if we commit to doing something, we actually do it.”
Rubio also took exception to remarks from witnesses and lawmakers regarding unplanned maintenance.
“The word ‘unplanned’ is being used like it’s a nefarious act ... as if they’re doing it on purpose to game the system,” Rubio said.
She also highlighted text in AB X2-1 that would allow regulators to deny refiners’ requests to stop production for maintenance.
“Who’s liable if a refinery’s planned maintenance request is denied and then something goes wrong?” Rubio asked.
A Republican lawmaker noted the dwindling number of refineries in the Golden State; there are about 13 today, compared with 40 in 1984. Nine of them produce gasoline, and the four largest supply most of the market, a fact that Gov. Gavin Newsom and others have cited as a problem because they believe the handful of companies are capable of market manipulation.
“It’s kind of ironic for me to hear how only four refiners control 90 percent of the market,” Assemblyman Joe Patterson, who sits on the gas supply committee, said during the hearing. “There was a time when we had more competition in this state, and things that maybe the state of California inflicted on itself are why we have less competition.”
Patterson said Californians are significantly affected by high fuel prices.
“I’m personally not here to protect the profit margins of anyone,” Patterson said. “My No. 1 concern is how much my constituents are paying for gasoline.”
Citing challenges with the state’s insurance market and some of the highest utility rates in the nation, he said lawmakers need to rethink the effect of policy choices on the economy.
“California hasn’t done a stupendous job of regulating the price of electricity or insurance,” Patterson said.
Supporters of AB X2-1 said the “common-sense” bill will give the Energy Commission the authority it needs to protect consumers.
“The goal of this measure is to guarantee that fuel is readily available during times of supply shortages and reduce prices for consumers,” Hart said during the hearing. “This bill will hold oil companies accountable for resupply plans when refinery shutdowns and supply chain disruptions occur, ultimately saving Californians billions at the pump.”
While the governor sought to push through similar legislation during the final days of the legislative session in August, the Assembly’s majority leader said the matter was too complex to manage in the final hours.
“The Assembly could have acted quickly at the end of session on a proposal, but many of us felt that we did not have the appropriate amount of time to consider this bill on the last day of session,” Aguiar-Curry said during the hearing. “This was especially true because this issue is important, and it impacts virtually every Californian.”
A representative from the Energy Commission said the bill would stabilize the oil market.
“These price spikes are not normal. They don’t happen in other parts of the country,” Siva Gunda, vice chair of the Energy Commission, said during the hearing.
Gunda also echoed remarks made by the governor and other lawmakers that price spikes are “profit spikes” for oil companies.
Challenges remain with regulating profits, he said, saying price spikes and fair profit margins would need to be defined.
The governor said the bill will help prevent gouging.
One oil industry spokesperson testified to the committee that attempting to regulate supply and demand could hurt consumers.
“That’s Economics 101. Your diligent work and the informational hearings revealed this simple idea is much more difficult and complex than originally thought,” Zack Leary, representing the Western States Petroleum Association, said during the hearing. “The state has to understand the implications of fuel policy—both from the climate and then on supply and demand.”
He noted a challenge in determining storage capacity because tanks are “constantly in motion” blending the components needed to create gasoline and cautioned against passing the bill because stricter regulations could cause more refiners to leave California.
“We believe the Legislature giving its authority to yet another state agency to raise everyday prices on consumers is not a good idea,” Leary said.
Representing labor groups, one witness said the issue of denying maintenance requests if storage capacity mandates are not met could jeopardize workers’ safety.
“For the safety and health of our members, this is a nonstarter,” Jeremy Smith, director of workforce development at the State Building and Construction Trades Council, said during the hearing. “It will be impossible to store the mandated 30-day time frame, which could lead to orders to not shut down for maintenance.”
During the public comment portion of the hearing, 10 people offered support, while more than 75 people representing a variety of labor and other organizations rose in opposition to the bill.
Balancing the needs of industry, labor, and consumers is a complex issue, one lawmaker noted.
“We recognize that this is not ... a simple challenge,” Assemblywoman Cottie Petrie-Norris, chair of the oil committee, said during closing remarks.
Another bill considered by the committee failed to proceed after the author refused to accept some of the proposed amendments.
He said that AB X2-1 would fail to benefit consumers and that his proposal would achieve results quickly.
“I will predict today, and I’ve seen this movie before, it’s not going to lower gas prices for anyone,” Gallagher said. “Let’s do something today that will actually reduce the price at the pump.”
