A pursuit led by California Gov. Gavin Newsom to address concerns about high fuel costs is advancing at the statehouse.
The Democratic governor convened a special session to set new requirements on oil refineries. Newsom said the special session would allow legislators to address the “pernicious problem” of fuel price spikes.
Specifically, the governor wants lawmakers to approve a bill that would require oil refiners to manage a minimum fuel inventory. He said the requirement would allow the state to avoid supply shortages that create higher fuel prices.
ABx2-1 would also authorize the unelected California Energy Commission to set minimum fuel storage requirements and standards for refiners in case of maintenance or an outage.
Refiners that do not adhere to the rules could face penalties up to $1 million per day.
“Price spikes on consumers are profit spikes for oil companies, and they’re overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance,” Newsom said in a recent news release.
The Senate Special Committee on Fuel Supply and Price Spikes voted 9-2 along party lines to advance the bill to the Senate floor. A full chamber vote could come up as early as Friday, Oct. 11.
Pushback from inside and outside of state
The governors of Arizona and Nevada oppose Newsom’s plan. They say the pursuit threatens to cut the supply of fuel from California to Arizona and Nevada and could hike fuel prices for consumers in the states.
California Republicans contend that better options to address high fuel costs include suspending fuel taxes, increasing transparency on price-setting and curbing overregulation.
The California Fuels and Convenience Alliance argues “this bill could lead to unintended consequences that would destabilize the fuel market, impose undue financial burdens on consumers and exacerbate existing infrastructure and regulatory challenges.”
“Newsom’s special legislative session has no hope of reducing high gas prices and shortages if it refuses to address the actual cause of such high prices and shortages — California’s own anti-competitive, anti-free market behavior.”https://t.co/sUfH6t99nO
— California Assembly Republicans (@AsmRepublicans) October 8, 2024
California notorious for high fuel costs
A California rule ties taxes on gas and diesel to inflation adjustments each summer.
On July 1, the state raised the 57.9-cent excise tax collected on gas purchases by 1.7 cents per gallon to 59.6 cents. The 44.1-cent diesel rate increased by 1.3 cents per gallon to 45.4 cents.
California’s average diesel price this week is about $1.16 above the national average for a gallon of on-highway diesel fuel, according to the U.S. Energy Information Administration. The state’s average gas price is about $1.27 above the national average for a gallon of regular gas.
The Tax Foundation has reported the Golden State places the “largest additional burden” on fuel prices in the nation via carbon taxes. California government agencies estimate about 12 cents per gallon being passed through from the Low Carbon Fuel Standard. Additionally, the state’s cap-and-trade program results in another 27 cents per gallon being passed through to consumers. LL
More Land Line coverage of California news is available.
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