Update: Gov. Gavin Newsom has called a special session of the Legislature to discuss his proposal to require oil refiners to keep a minimum reserve on hand at all times to reduce price spikes.
Newsom called for a special session on Saturday, just hours before the Legislative year was scheduled to end and while lawmakers were working through hundreds of bills.
“It should be common sense for gas refineries to plan ahead and backfill supplies when they go down for maintenance to avoid price spikes,” Newsom said. “But these price spikes are actually profit spikes for Big Oil, and they’re using the same old scare tactics to maintain the status quo.”
Assembly Speaker Robert Rivas (D–Hollister) said his house welcomes the special session, which would keep them from rushing to approve the mandate last week.
But State Senate President Pro Tempore Mike McGuire released a statement saying otherwise.
“We have all been working on this California Made and Clean Energy Package for months, and some of these proposals have been in discussions for the better part of a year,” McGuire said. “The Senate always had the votes and was ready to get these important measures across the finish line this legislative year and deliver the relief Californians need at the pump and on their electricity bills. We won’t be convening a special session this fall, but we look forward to continuing conversations with the Governor and Speaker about this critical issue in the days and weeks to come.”
Original story
California Gov. Gavin Newsom is receiving major pushback on his proposal to implement increased regulations on oil refiners.
Republican leaders and Chevron wrote letters to Newsom and the state, respectively, arguing against Newsom’s proposal.
The backstory: Earlier in August, Newsom called on California to mandate oil refiners maintain a minimum fuel reserve to avoid supply shortages.
- He also wants to require oil refiners to present plans to the California Energy Commission (CEC) regarding resupply and production loss due to refinery maintenance.
- California would hit oil refiners with penalties if they do not comply with the mandate.
Driving the news: Senate Bill 950 was introduced this week just ahead of the end of the legislative session.
- SB 950 would implement Newsom’s proposal.
- The CEC also released a report saying SB 950 will raise gas prices for Californians have impact consumers in Arizona and Nevada as well.
Republican pushback: California Republicans penned a letter to Newsom requesting answers to the following questions:
- What is the expected impact (per gallon) on retail fuel prices of requiring refiners to withhold inventory from the market, and how was that projection calculated?
- How do you plan to mitigate or prevent the fuel shortages the California Energy Commission is warning of if SB 950 becomes law?
- How do you reconcile the policies being advanced by CARB that will intentionally increase fuel costs with the Energy Commission’s goal of stabilizing the price of fuel?
What they’re saying: “If Newsom wants to jam this reckless plan through the Legislature at the last minute, he should level with Californians about just how much this will increase costs for drivers,” said Assembly Republican Leader James Gallagher (Yuba City). “Democrats have already given Californians some of the most expensive gas in the country. Newsom is insane if he thinks we’ll stand by as he tries to make things even worse.”
- Senate Minority Leader Brian Jones (San Diego) said Newsom is finally realizing that he’s done nothing but increase costs for Californians at the pump.
- “Just like his last failed plan, SB 950 will only increase gas prices and further burden financially strapped Californians,” Jones said. “Newsom is driven around by taxpayer-funded chauffeurs, in taxpayer-funded SUVs, filled with taxpayer-funded gas. The man hasn’t touched a gas pump in years. Should we be following his lead on this, or the economists and business owners who actually know what’s going on and are screaming from the rooftops that this bill will hurt consumers at the pump?”
Chevron’s response: Chevron wrote in its letter to the CEC that SB 950 would risk the safety of refinery operations by giving the CEC unbridled authority over maintenance and compliance work.
- “Misguided CEC demands prioritizing arbitrary inventory mandates will conflict with safety, compliance, or state requirements,” the letter reads. “At best, the bill could result in safe refinery shutdowns which could impact reliability and supply. At worst, the bill could result in refinery incidents. This is another example of political decision-making ignoring market realities and consumer needs.”
- Further, Chevron said building one new storage tank could take a decade and cost $35 million, with those costs likely being passed on to the consumer.
- “And given the current regulatory regime, with constraints on permits and a gasoline vehicle sales ban, there is no opportunity to recover capital invested to build additional tanks, which could be the ‘last straw’ for the state’s energy market investors,” the letter reads.
- Chevron continued, “We see this all for what it is: more government policies that will increase gasoline prices, with politicians then attempting to shift the blame to refiners.”
- SB 950 is another bill that continues to risk making California “uninvestable,” Chevron said.
What we’re watching: If Newsom is going to get his wish, it’s going to have to come in a special session.
- Assembly Speaker Robert Rivas (D–Hollister) said Friday that he will not push through SB 950 without vetting it first.
- “We shared our affordability legislative proposals in June, and we’re on the same page with Governor Newsom about the absolute urgency of getting this done,” Rivas said. “If the Governor calls a special session, we’re going to do the work and deliver results.”
