California Gov. Gavin Newsom, D, is urging state lawmakers to pass new regulations for oil refiners as the legislative session nears its end. The proposal aims to address high gas prices by requiring oil companies to keep extra fuel reserves on hand. However, some industry opponents are pushing back.
Newsom argued that by requiring refiners to maintain oil reserves, the state can avoid fuel shortages and prevent sudden spikes in gas prices. Under the plan, refiners who fail to comply would face fines, and the money from these penalties would be collected into a fund and given back to consumers.
“Price spikes at the pump are profit spikes for Big Oil,” Newsom said. “Refiners should plan ahead and keep supplies stable instead of just trying to boost their profits. This will help Californians save money on gas every year.”
This proposal follows an unsuccessful attempt by Newsom two years ago that would tax excess profits from oil companies. It also comes after a new law in 2023 increased transparency in the oil industry.
State officials said data indicates that oil refiners are planning maintenance that reduces supply and raises prices during busy driving seasons.
However, the Western States Petroleum Association has countered these claims, blaming state policies for high prices.
“To impose new operational mandates on energy producers based on such falsehoods is regulatory malpractice and ignores the logistical challenges and costs associated with such a plan,” the association said in a letter. “When this administration is ready to have a serious discussion about the facts and the policies this state has imposed that affect consumer costs, we will be there.”
With only two weeks left until the legislative session ends on Aug. 31, it remains to be seen how this proposal will unfold.
