CALIFORNIA, USA — Gov. Gavin Newsom’s proposal to combat gasoline price spikes appears headed to a long-awaited Assembly floor vote next week after passing out of committee on Thursday.
But the politics of oil industry regulation are never that simple in California. To pass Assembly Bill X2-1, which would require refineries to maintain additional inventory that they can draw from during maintenance periods, Democratic lawmakers will have to ignore the fierce opposition of an important ally: The State Building and Construction Trades Council, an umbrella group for California construction worker unions that represents hundreds of thousands of laborers.
Many of them — steelworkers and boilermakers employed at refineries — crowded Thursday’s hearing to voice concerns that state oversight of maintenance would prioritize economic considerations over their safety, and that the bill would establish minimum inventory requirements that refineries are unable to meet, forcing them to shut down.
- Chris Hannan, president of the building trades council, to CalMatters following the committee vote: “Hopefully they don’t move forward with something with this much uncertainty that could jeopardize worker safety and jobs in our state.”
The Assembly is slated to meet Tuesday to consider the bill. But the vocal opposition from organized labor — a powerful force at the state Capitol and an interest group to which the ruling Democrats are far more sympathetic than the oil industry — adds another wrinkle for members. Many of them were already wavering over fears that Newsom’s proposal could instead drive up prices at the pump by restricting supply.
During nearly four hours of testimony and questions at Thursday’s hearing, the risk to workers came up repeatedly. Before calling the vote, Assemblymember Cottie Petrie-Norris, the Irvine Democrat who leads the committee, felt compelled to address Hannan directly.
- Petrie-Norris: “I hope that you’ve heard loud and clear that worker safety is paramount to all of us. … Certainly none of us are proposing that we would ever compromise worker safety in order to increase liquidity and drive prices down.”
The bill ultimately passed on a 13-2 vote. Three moderate Democrats on the committee abstained — a persistent pocket of resistance that Newsom may still have to tamp down if he wants to advance his proposal.
Meanwhile, Republican legislators and refineries argue the proposal will make gas more expensive.
So would Newsom’s proposal work?
Experts told CalMatters business reporter Malena Carollo that it could make a difference — kind of. That’s because when a refinery goes down for maintenance, it’s not making the same amount of fuel as it typically does. The remaining fuel becomes more valuable, which temporarily drives up prices. But requiring refineries to have a minimum inventory can ease these spikes.
But the bill is “not a panacea for all the issues in the California gas market,” said one Stanford University economist. Ever since 2015, after a refinery exploded in Torrance, California has had a “mystery surcharge” that makes gas here pricier than the rest of the country. This surcharge can’t be explained by the state’s taxes or environmental fees, and accounts for about 40 cents per gallon, totaling about $60 billion out of Californian’s pockets since 2015.
This article was originally published by CalMatters.
