California state senators approved a bill on Oct. 11 in a 23–9 vote that will give the California Energy Commission more authority to regulate oil refineries with the goal of lowering gasoline prices.
The bill does not set minimum reserve levels or maintenance timeframes, but it gives the commission the authority to do so.
Supporters say the additional reserves will help mitigate price fluctuations due to limited supply.
A joint author of the bill said price spikes of 50 to 75 cents per gallon have cost Californians approximately $2 billion annually.
“ABX2-1 should help stabilize gas prices and provide California motorists with some much-needed relief at the pump,” Sen. Nancy Skinner said in the statement.
During closing remarks before the Senate voted, Skinner called the bill an “important measure to protect California households.”
One Democratic colleague said the Legislature and regulators must monitor any impacts to ensure actions don’t have unintended consequences.
“All members of the Senate share concerns about the effect rising gas prices have on California families and the ripple effects that may have on the costs of other goods,” Sen. Steven Bradford, chair of the Senate Special Committee on Fuel Supply and Price Spikes, said in the press release. “As policymakers, we must be diligent in our oversight of the regulatory agencies to ensure that this legislation is implemented in a manner that protects the safety of the workers and makes gasoline more affordable for families. There is still much work to be done.”
“Californians are one step closer to getting the protections they need against Big Oil’s price spikes,” Newsom said. “I’m grateful to our partners in the Senate for helping to save Californians money at the pump.”
Critics of the bill said the measure could cause gas prices to increase because refiners could be forced to limit supply to keep reserves at established limits.
Chevron executive Andy Walz sent a letter to the Legislature on Oct. 8, warning lawmakers the bill could achieve the opposite of its intended goal.
“California’s policy choices have led to a gasoline shortage by driving suppliers away,” Walz said. “We have a shortage of incentivizing policy for additional refiners and supply. California, stop making consumer conditions worse.”
Walz said the bill would increase supply shortages and cause a “permanent rise” in prices.
“Both risks extend beyond California, which should create the need for the legislature to proceed with caution, as policies that raise prices for the state could also affect neighbors in Arizona and Nevada,” Walz wrote.
“With both of our states reliant on California pipelines for significant amounts of our fuel, these looming cost increases and supply shortages are of tremendous concern to Arizona and Nevada,” they wrote. “Further amplifying our concerns, refiners have raised the alarm that refinery inventory mandates could result in supply shortages and potential refinery shutdowns, which would have grave impacts to our shared economies and transportation infrastructure across the West.”
Others took exception to the scope of the powers the bill grants the Energy Commission, including the ability to impose fines from $100,000 to $1 million per day for noncompliance.
“This bill gives the [commission] a lot of power,” Republican Sen. Brian Dahle said during the floor session before the vote. “I don’t know how that is going to drive down the cost of oil and gas in California.”
He said the bill could have waited until the next legislative session.
“I can’t understand why we’re actually having a special session,” Dahle said. “This bill doesn’t do anything urgent.”
One Republican senator said her bill to suspend the gas tax for one year to help lower the price at the pump was not allowed a hearing.
Other bills introduced in the Assembly that sought to remove fuels from the state’s cap-and-trade system, which is used to fine companies that exceed carbon emission limits and temporarily repeal the gas tax, among other things, also failed to advance.
Ochoa Bogh said Californians deserve help from legislators to find solutions that lower the cost of living.
“It is time we start delivering for the people we’re elected to serve,” Ochoa Bogh said.
Members of both political parties raised concerns during hearings for the bill about the impact the state’s clean air and other policies are having on the price of gas and energy.
The Assembly will next consider Senate amendments—including a cap on small refinery exemptions and protections for the health and safety of employees, local communities, and the public, among other things—on a date yet to be determined.
