California Gov. Gavin Newsom’s mandate on oil refiners has become law.
Newsom signed ABX2-1 on Monday, codifying his mandate after several weeks of pushing for it with a special session of the Legislature in what he says is an effort to prevent spikes in gas prices.
The big picture: Newsom’s mandate gives the California Energy Commission (CEC) greater authority over the state’s oil refiners, a move that Republicans and oil companies say will only result in higher gas prices.
- ABX2-1 requires oil refiners to keep a minimum reserve on hand at all times. Newsom has argued that such a mandate will force refiners to avoid supply shortages, which he blames for creating higher gas prices.
- The CEC will now have the authority to require refiners to plan for resupply during maintenance outages, putting more power in the hands of California bureaucrats.
How we got here: Hours before the Legislative year was scheduled to end on Aug. 31, Newsom called for a special session to consider his mandate.
- While the Assembly was on board for the special session immediately, Senate Democrats were initially opposed, saying they were ready for the mandate for months but wouldn’t move forward with it since it never came up in the regular schedule. But the Senate eventually caved in to Newsom and agreed to the special session.
- Republicans were vocally opposed to the mandate from the start and were joined by the Governors of Arizona and Nevada, who wrote a letter to Newsom urging him to reconsider since the mandate would likely result in higher fuel prices for their states.
What they’re saying: Newsom took a victory lap on Monday after signing the bill, saying California is not waiting around for the oil industry to take action to save consumers money at the pump.
- “Now, the state has the tools to make sure they backfill supplies and plan ahead for maintenance so there aren’t shortages that drive up prices,” Newsom said. “I’m grateful to our partners in the Senate and Assembly for acting quickly to push this forward and help deliver relief for Californians.”
- Assembly Speaker Robert Rivas (D–Salinas) and Senate President pro Tempore Mike McGuire (D–North Coast) echoed Newsom with similar sentiments.
- “With this new law, big oil companies are now responsible for stabilizing prices at the pump,” Rivas said. “It’s a critical accomplishment, but our work is not done. I will continue to fight to lower the cost of living, because housing groceries and everyday necessities must be more affordable for all Californians.”
- McGuire added, “Today, we’re coming together to provide needed relief at the pump and help keep hard-earned dollars in the pockets of Californians. I’m grateful to Gov. Newsom, Speaker Rivas and members of the Senate and Assembly for taking swift action on this critical issue. That said, our work isn’t stopping. We’re going to continue to grind away to help lower the cost of living for folks in every corner of the Golden State. It’s a necessity.”
The other side: “The Governor continues to point fingers for his policies that drive up gas prices – making life unaffordable,” said Asm. Tom Lackey (R–Palmdale). “What Californians need is immediate relief, and that can be done by suspending the $0.60 per gallon gas tax. Hardworking Californians deserve better than the Governor’s experiment.”
- The Western State Petroleum Association, a nonprofit trade group that represents oil companies across the west coast, blasted California Democrats for fixating on controlling businesses and for failing to understand the industry.
- “Most alarming, our leaders ignored the men and women in the oil and gas industry who stepped forward to offer real expertise and express grave concerns,” said President and CEO Catherine Reheis-Boyd. “California’s energy infrastructure remains under threat from government neglect and is on the brink of failure, which will send prices even higher. And all of this could have been avoided.”
