California Gov. Gavin Newsom has signed into law a bill to address concerns about high fuel costs.
The governor recently convened a special session focused on setting new requirements on oil refineries. Newsom said new rules are needed to address the “pernicious problem” of fuel price spikes.
Specifically, state lawmakers passed along party line votes legislation to 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.
Previously ABx2-1, the new law authorizes 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 have cost Californians billions of dollars over the year, and we’re not waiting around for the industry to do the right thing – we’re taking action to prevent these price spikes and save consumers money at the pump,” Newsom said in a news release.
Price spikes have cost Californians billions of dollars over the years, and we’re not waiting around for the industry to do the right thing.
California is now equipped with more tools to require that petroleum refiners backfill supplies and plan ahead for maintenance outages. pic.twitter.com/KWwER179Bs
— California Governor (@CAgovernor) October 14, 2024
Pushback inside and outside of state
Action at the statehouse comes despite concerns voiced by the governors of Arizona and Nevada. In a letter to Newsom, the 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.
California Republicans lamented that Democrats at the statehouse did not consider what the GOP describes as better options to address high fuel costs. Options included suspending fuel taxes, increasing transparency on price-setting and curbing overregulation.
The California Fuels and Convenience Alliance argued the pursuit “could lead to significant unintended consequences that would destabilize the fuel market, impose undue financial burdens on consumers and small business owners, exacerbate existing infrastructure and regulatory challenges, and jeopardize drivers in the Golden State and our neighboring states.”
Andy Walz, Chevron president of Downstream, Midstream and Chemicals division, told state lawmakers the governor’s argument for the legislation is “inaccurate and flawed.”
Walz said the bill feeds into “baseless and frankly ridiculous claims that the industry is engaging in price gouging.”
“Let us have a balanced, fact-grounded conversation about the state of California’s fuels marketplace, a marketplace weakened by misguided policy decisions, driven by misleading rhetoric,” Walz wrote.
He previously told Sacramento KCRA 3 Chevron may no longer do business in California if the state continues to move forward with regulations on the industry.
The governor just signed AB X2-1, raising gas prices with more red tape while calling it a win for you.
Meanwhile, @CASenateDems blocked @SenOchoaBogh’s bill to suspend the gas tax, which would’ve lowered prices.
Just admit you’re playing games with our money, governor. pic.twitter.com/ZWj77DHwSa
— CA Senate Republicans (@CASenReps) October 14, 2024
California notorious for rules on fuels
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 is about $1.28 above the national average for a gallon of diesel fuel, according to ProMiles. 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.
Credit: Source link