SACRAMENTO, Calif. — California drivers can easily feel fed up when filling up their gas tanks, paying the highest average prices in the continental U.S.
Speaking with reporters Wednesday morning, Governor Gavin Newsom said he blames oil companies, especially for the price spikes Californians see in the fall.
“This is the time of year that we have ‘planned’ and unplanned refinery maintenance, which spikes the cost of gasoline and spikes the profits of those that are doing the maintenance,” Newsom said. “Five companies have 90% of the market share in the refinery space.”
Last year, state lawmakers created a watchdog advisory committee in response to gas price spikes in the fall of 2022. Reports from the committee show oil companies failed to keep enough extra fuel supply on hand when they knew maintenance would cut production — and that low supply led to high gas prices for Californians.
“Hard-working folks being fleeced by the greed of these oil companies. These price spikes go directly in their pocket,” Newsom said. “We’re trying to get our arms around that, and both legislative leaders are committed to that process.”
On Saturday, the final day of the regular legislative session, Newsom called a special session on gas prices, to convene as soon as possible.
Speaker of the Assembly Robert Rivas expressed his support, but Senate President pro Tempore Mike McGuire did not, saying, at the time, that the senate wanted to pass gas price relief that day, before the end of the regular session, which did not ultimately happen.
But McGuire may be shifting his position.
On Wednesday, McGuire’s Office said, “the Governor and Senate Pro Tem had a productive meeting on Tuesday about a path forward to protect Californians from gas price spikes. They’ll continue to work collaboratively and we’ll have more to share soon.”
On Tuesday, state lawmakers introduced a bill for the special session that would — among other things — require petroleum refiners to maintain a minimum fuel reserve to avoid supply shortages and potentially fine them if they don’t.
The oil industry said this approach could actually lead to higher gas prices year-round.
“I think what we’re seeing here is the Governor trying to be very political about a very important issue, and — in the end — that’s all it’s going to really do, is cost consumers once again,” said Kevin Slagle, Vice President of Communications with the Western States Petroleum Association, which opposes what it calls Newsom’s “Refinery Fuel Supply Mandate.”
“Refineries are just really big, complicated chemistry sets at their heart, and they’re dialed in to produce fuels very efficiently and a certain way. You can’t just dial them up; you can’t just dial them down,” Slagle said. “So the idea that, you know, the Governor says, ‘Well, just ramp up to add supply.’ That doesn’t work. The idea that we could actually permit additional fossil fuel infrastructure in the state to create more storage — politically, that’s probably impossible. And so the only way to create this storage that they want to have when there is some maintenance, is to withhold fuels from the market permanently, year-round.”
In other words, he said the industry would have to siphon from the existing fuel supply throughout the year in order to meet the governor’s demand for backup supplies during times of maintenance.
“This is just part of it. There is a number of policies that California has implemented over the last several years, especially, that decrease supplies of fuel in the state,” Slagle said. “There’s the Cap and Trade Program. There’s Low Carbon Fuel Standard. Those programs may have merit, but they also have costs, and so we continue to pile on policy on top of policy.”
Nevada and Arizona are supplied by California’s refineries and could also see higher gas prices year-round if Newsom’s proposal moves forward, he said.
At Wednesday’s news conference, Newsom was asked about the state gas tax and if prices are so high, why not just lower that?
Newsom said he’s not considering that for two reasons. One, the gas tax funds needed investments in infrastructure. Two, there’s no requirement that oil companies reduce the price of gas commensurate with any drop in the state gas tax, so it wouldn’t even be a guaranteed solution, he said.
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