At Newsom’s urging, lawmakers consider more oil regulations in California
The California Assembly on Tuesday passed legislation aimed at reducing sudden gas price increases, action inspired by Gov. Gavin Newsom’s political battle with the oil industry over blame for the state’s nation-leading per-gallon costs at the pump.
The extended deliberations at the state Capitol over affordability underscore the challenges state Democratic leaders face carrying out their agenda to transition California away from a dependence on fossil fuels.
In the ongoing special legislative session called by Newsom, the Democratic-led Assembly approved bills that give the state the authority to place new requirements on California oil refiners to keep adequate reserves. The mandate could prevent price spikes in the future but offers no immediate relief at the pump.
It’s the second year in a row that lawmakers have targeted California’s gas price increases. The proposals must also be adopted by the Senate and signed by the governor to become law.
“The goal is simple: Guarantee that fuel reserves are readily available for consumers during maintenance events and supply constraints,” said Assemblymember Gregg Hart (D-Santa Barbara), who introduced one of the two bills approved Tuesday. “Let’s take action now to provide relief to Californians who need gasoline in their cars to get to work, drive their children to school, vote and visit loved ones.”
As the November election fast approaches, lawmakers rejected Republican calls to change climate laws to potentially deliver larger and faster savings to consumers.
“If we didn’t come here to actually lower consumers’ gas prices, then why are we here?” asked Assembly Republican Leader James Gallagher (R-Yuba City) during the floor session. “And what I’m hearing is that all we’re really considering is this proposal from the governor that doesn’t lower gas prices. At best, in theory, it will stop gas price spikes. But the people that I hear from, and that I’m sure you hear from, your constituents, think that the price of gas is too damn high right now.”
The unusual move pushes the Legislature into overtime to address energy affordability just as campaign season heats up in advance of the Nov. 5 election.
The Assembly passed legislation Tuesday to authorize the California Energy Commission, through its rulemaking process, to mandate that oil refiners maintain a minimum inventory level to avoid shortages when equipment goes off line because of maintenance issues.
The lower house also approved a bill that sets a July 1 deadline for the energy commission and the California Air Resources Board to recommend ways to increase the state’s gasoline supply, such as adding more ethanol to fuel, limiting the use of the state’s summer blend or adopting other potential solutions.
The governor alleges that a handful of oil refineries, which produce the state’s special blend of more environmentally friendly fuel, are manipulating the market to maximize their profits at the expense of Californians.
After gathering more insight about pricing from laws passed in the previous special session on oil prices last year, state regulators had reported that charges at the pump increase when the oil companies do not maintain enough refined gasoline to backfill production shortfalls or protect against the effect of unplanned maintenance.
“I’m grateful to the Assembly for joining with me in our efforts to prevent gas price spikes and save Californians money at the pump,” Newsom said in a statement. “Just last year, price spikes cost Californians more than $2 billion — forcing many families to make tough decisions like choosing between fueling up or putting food on the table. This has to end, and with the Legislature’s support, we’ll get this done for California families.”
Newsom was not present during the vote. He attended the inauguration of Mexican President Claudia Sheinbaum in Mexico City on Tuesday.
Oil companies say price spikes are a result of the state’s climate change policies, which increase the cost of bringing gasoline to the market and leave the state dependent on a small number of refineries. The Legislature’s repeated efforts to regulate a complex oil market, the industry says, could have the adverse consequence of raising the prices they seek to lower.
Assembly Speaker Robert Rivas (D-Hollister) declined to have the lower house vote on a very similar proposal that Newsom sought to push through the Legislature in the final weeks of the regular session in late August, citing the need for more time to hold hearings and consider the bill.
Newsom’s office had begun talking with the Senate and Assembly earlier in the summer about legislation that would allow his administration to require that petroleum refiners maintain a stable inventory. Newsom and his aides hoped the bill would become part of a package of legislation supported by the Senate and Assembly, which failed to materialize.
After Rivas said the Assembly wanted more time, Newsom convened a special session on Aug. 31.
Newsom energy package sparks tug of war in final hours of California legislative session.
Through a series of hearings over the last month, Assembly members sorted through the contrasting narratives from the governor and the industry to understand the best path forward to regulate a complex oil market.
Gallagher introduced a proposal that would have exempted transportation fuels from California’s cap-and-trade program, which he said could save consumers 30 cents per gallon of gasoline. The bill also would have required regulators to waive requirements for California to use its summer blend of gasoline, which is more expensive, when prices raise or supply is low.
Assembly Democrats rejected the bill in a legislative hearing. Republicans voiced concerns that prices will continue to go up next year under changes to the cap-and-trade program and the state’s low carbon fuel standard.
“This has got to be the biggest dog and pony show I’ve seen up here in 10 years,” said Assemblymember Devon Mathis (R-Visalia) during the floor vote. “We are blaming everything we can on the reason why gas is so expensive in our state, except for the fact that the governor and this body haven’t moved.”
After the vote, Rivas offered a reminder that the special session was convened specifically to tackle price spikes.
“It’s estimated by the state that this is going to result in around $2 billion to local residents,” he said about the potential savings to consumers. “But we have to do a lot more when it comes to this affordability crisis that the state faces, both at the gas pump and so many other areas.”
Democrats in the California Senate, who said they wanted to pass Newsom’s original proposal about supply mandates before the regular session ended, decided to wait for the Assembly to vote on the bills before reconvening the upper house in the special session.
The Senate will begin considering the bills next week in hearings on Monday and Tuesday, with floor votes scheduled on Friday.
“The Senate intends to work quickly and efficiently so that we can get Californians the relief they deserve at the pump,” Senate Pro Tem Mike McGuire (D-Healdsburg) said in a statement.
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