Newsom Backs Making California Oil Refineries Keep Minimum Supplies

A man fills his tank at a gas station in Alhambra, California, on Oct. 2, 2023. Frederic J. Brown/AFP via Getty Images

California Gov. Gavin Newsom called on state lawmakers Aug. 15 to pass new regulations on oil refineries in the final two weeks of the session, mandating minimum supply levels to curtail future price spikes.

If passed, the first-in-the-nation program would allow the state’s Energy Commission to penalize refiners who fail to follow new supply minimums.

The refineries would also have to file plans with the state detailing how they plan to cover production losses when they close for maintenance.

The proposal is a continuation of Newsom’s effort to “fight big oil” after gas prices spiked to a record average of $6.44 per gallon in June 2022.

He has since created the Division of Petroleum Market Oversight, overseen by the Energy Commission, to impose heavy regulations on the state’s oil refineries.

“Price spikes at the pump are profit spikes for big oil,” Newsom said in a press release Thursday. “Refiners should be required to plan ahead and backfill supplies to keep prices stable, instead of playing games to earn even more profits.”

According to Newsom, the Energy Commission found that in 2023, there were 63 days when California refiners maintained less than 15 days of gas supply, driving up prices.

The governor said Californians would save $650 million in gas costs with the additional regulations, without providing details.

He also alleged the state’s new oil regulations helped avoid gas price spikes and “held big oil accountable” by keeping prices lower this year. His office did not return a request for comment asking for details about the claim.

California has the highest gas prices in the nation, reaching an average of $4.60 on Aug. 15—$1.20 more than the national average, according to the American Automobile Association (AAA). California also has the highest gas taxes in the nation and requires oil companies to produce and use a special eco-friendly summer blend, which adds to the cost in the summer.

Newsom’s plan was quickly criticized by Western States Petroleum Association, a nonprofit trade association.

“To impose new operational mandates on energy producers based on such falsehoods is regulatory malpractice, and ignores the logistical challenges and costs associated with such a plan,” Catherine Reheis-Boyd, president and CEO of the association, told The Epoch Times in an email. “When this administration is ready to have a serious discussion about the facts and the policies this state has imposed that affect consumer costs, we will be there.”

The association criticized the proposal as an attempt to demonstrate that the state’s new agency regulating the oil industry was working.

Reheis-Boyd said the minimum supply proposal “is nothing more than a political attack on consumers and our industry.” She also said Newsom’s claims about planning maintenance during the busiest driving season are misleading and show an lack of understanding about the industry.

According to Newsom’s office, the governor’s proposal is modeled after similar regulations in Australia, Japan, and the European Union.

Chevron Corp. announced Aug. 2 that it planned to relocate its headquarters from California to Texas by the end of the year, joining the exodus of oil companies that have recently left the state to escape the higher taxes and strict climate action regulations.

Chevron announced its move after the company contested California’s oil-production and refining operations.

The oil giant, which was incorporated in 1879 in San Francisco, will keep employees in San Ramon and support its California operations from there. Chevron operates crude oil fields, technical facilities, and two refineries, and supplies more than 1,800 retail stations in California, according to the company.