In the latest episode of the political battle with Big Oil, Gov. Gavin Newsom on Thursday called on California lawmakers to pass new requirements on oil refiners during the final two weeks of the legislative session.
Newsom’s last-minute proposal, his office said, would allow the administration to require petroleum refiners to maintain stable inventories to prevent fuel shortages and price spikes when refinery equipment is taken offline for maintenance.
The plan marks the continuation of the governor’s campaign to blame the oil industry for high gas prices in California and another attempt by Newsom to jam legislation through the state Capitol. Newsom announced his proposal nearly two years after he announced a special session on oil prices that ultimately fell short of calls to cap the industry’s profits.
“A price spike at the pump is a profit spike for Big Oil,” Newsom said in a statement. “Refiners need to plan and replenish supplies to keep prices stable, instead of playing games to make more profits. By making refiners act responsibly and maintain gas reserves, Californians will save money at the pump every year.
After Democrats balked at the idea of punishing the oil industry during a special session, lawmakers determined that state regulators need more information on oil prices to better understand and stop price spikes at the pump.
The Democratic Legislature passed a law last year that established new transparency requirements for the oil industry and gave the California Energy Commission the power to set profit caps and impose penalties through the regulatory process.
The law established the Petroleum Market Oversight Division at the energy commission, and authorized it to collect new data from the industry to investigate price spikes. Earlier this year, the division wrote a letter recommending that the state determine minimum inventory and resupply requirements for refining based on findings so far, arguing that oil companies do not maintain enough refined gasoline to fill production shortfalls or protect against the impact of unplanned maintenance. .
“This lack of supply is foreseeable and preventable, but California refiners are not under legal obligation to maintain sufficient supply to protect Californians from price spikes,” reported the division.
Assembly Republican Leader James Gallagher (R-Yuba City) criticized the governor’s proposal as a “half-baked attempt to obfuscate the simple fact” that state policies are responsible for high gasoline costs.
“If Newsom is serious about bringing down prices, he will streamline the approval process for new gas storage projects, stop pushing new regulations that will increase costs even more and make it easier to produce energy here in California,” said Gallagher in a statement. “Democrats have imposed the strictest regulations and the highest gas taxes in the country — and all of that is reflected in pump prices.”
So far, it’s unclear whether Democratic lawmakers will follow through on Newsom’s proposal or how they would respond if a bill makes it to the end of the legislative process. The Legislature has about two weeks to take action on hundreds of bills before it adjourns for the year at the end of August.
Newsom’s office said he discussed the plan with legislative leaders before announcing it Thursday. The proposal has not been included in the bill and was only summarized by the governor’s office during a press release.
“We are in active discussions with the governor about his petroleum market supervision proposal,” said Nick Miller, a spokesperson for Assembly Speaker Robert Rivas (D-Hollister). “The discussion, as well as consultation with members of the Assembly, will continue.”
A spokesman for Senate President Pro Tem Mike McGuire (D-Healdsburg) did not respond to a request for comment.
Newsom introduced the bill on the same day lawmakers followed through on an agreement made with the oil industry to end a campaign to repeal laws that prevent new oil and gas wells from being drilled within 3,200 feet of homes, schools, parks and hospitals.
California Independent Petroleum Assn. and other supporters of the referendum campaign on the law of setbacks agreed in late June to withdraw the measure from the November vote.
As part of the compromise, Assemblyman Isaac Bryan (D-Los Angeles) said he agreed to limit the scope of another bill, AB 2716, which will impose a penalty of $10,000 for each day that oil wells “low production” are operated on. 3,200 feet is called “sensitive receptors.” Lawmakers officially amended the bill Thursday to apply only to the Inglewood oil field.
“As agreed upon, we are limiting the scope of this bill to the largest urban oil field in the country that is directly in my district,” Bryan said. “It’s time for these oil fields to pay the penalty for the damage caused to the surrounding communities and invest the funds for a sustainable future for the people who live around them.”
He said that if the original setback laws could go into effect immediately it would be “the most important environmental victory we can achieve all year.”
