California Gov. Gavin Newsom is again calling for changes to address concerns about high fuel costs.
The Democratic governor has convened a special session following the Assembly Democrats’ decision to adjourn the regular session without backing his pursuit of new requirements for oil refineries.
Newsom said the special session will allow legislators to address the “pernicious problem” of fuel-price spikes.
Specifically, the governor wants lawmakers to approve a requirement to maintain minimum supply inventories. He said the requirement would help prevent fuel-price spikes and save Californians money.
“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 wrote in a news release.
California rules link taxes on gas and diesel to inflation adjustments each July.
On July 1, the state increased 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 is about $1.21 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 $1.33 above the national average for a gallon of regular gas.
The Tax Foundation reports 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.
The governors of Arizona and Nevada have voiced concern about Newsom’s plan.
Arizona Gov. Katie Hobbs and Nevada Gov. Joe Lombardo sent a letter to Newsom urging him to reassess his plan to maintain minimum supply inventories.
The neighboring governors said 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.
“The people of Nevada and Arizona should not have to foot the bill for California’s misguided policies – especially when it comes to higher gas prices,” Lombardo wrote. “Lowering fuel costs is a bipartisan issue, and I’m grateful to partner with Gov. Hobbs as we fight back against policies that will raise prices and cause regional economic disruption.”
The letter also states a warning from refiners regarding inventory mandates that could lead to supply shortages and possible refinery shutdowns.
The California Assembly Republicans have offered alternatives.
Assembly Republicans introduced a series of bills touted to provide immediate and long-term relief for drivers across the state.
Assembly Republican Leader James Gallagher said the package includes measures to suspend fuel taxes without impacting transportation projects, to increase transparency on price setting and to curb overregulation.
“Through six years in office, Gavin Newsom has completely failed to bring down the cost of gas, and California drivers have paid the price,” Gallagher wrote. “This special session is just one more attempt by Newsom to distract from his role in driving up gas prices.”
Gallagher added that an analysis of Newsom’s proposal by the California Energy Commission found it has the potential to “artificially create shortages in downstream markets” and “increase average prices.”
The special session can continue until Nov. 30.
Today in our “extraordinary session”, I introduced legislation to freeze the Governor’s proposed gas price increase of up to 47 cents. pic.twitter.com/wHBKSdOW0Z
— Joe Patterson (@Patterdude) September 11, 2024
This isn’t the first time Newsom has called for addressing high fuel prices.
In March 2023, he signed into law a bill targeting oil companies for high fuel prices.
The rule gives the state authority to punish oil companies for profiting from fuel-price spikes. As a result, the windfall-profits penalty law created new regulations and oversight for oil companies.
The California Energy Commission is authorized to decide whether to impose civil penalties on oil companies for price gouging. Specifically, the commission is allowed to set a maximum fuel refining margin with penalties on oil companies for exceeding it.
In addition, the commission can receive information from the state that can require oil companies to disclose financial data. The agency also has subpoena power over oil executives. LL
More Land Line coverage of news from California.
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