California Plan to Keep Gas Prices Stable Is Signed Into Law by Newsom

Gov. Gavin Newsom on Monday signed into law his plan to prevent gas price spikes after more than a month of a special legislative session.

Assembly Bill X2-1 will allow the California Energy Commission to require oil refiners to maintain a certain inventory of fuel to deliver during periods of maintenance that reduce refining capacity.

Proponents say it will lessen volatility in prices at the pump, ultimately saving Californians money. However, opposition groups, led by the oil industry, have questioned the need for a special session to address the bill and want to redirect focus to maintaining the state’s dwindling number of oil refiners.

Newsom said he was proud that the Assembly was able to get the bill through despite pushback from the oil industry, particularly the Western States Petroleum Association.

“Big oil that knowingly continues to lie to the people of this state, our nation, for that matter, around the world,” Newsom said. “They are the polluted heart of this climate crisis. They continue to lie and they continue to manipulate. And they’re taking advantage of you.”

Newsom had hoped to pass the bill at the end of this year’s regular session but wasn’t able to get it through. In a statement, he said he had called for a special session this fall to address gas price spikes after identifying the problem as a result of gas-related bills passed during a special session last year.

Assemblymember Alex Lee, one of the principal co-authors of ABX2-1, said that working through the bill in a special session has given lawmakers more time to focus on the oil industry.

“We are opening up the big oil and oil industry to more scrutiny by our public regulators, enabling us to understand more how they price gouge and set prices,” he told KQED. “The more and more we’ve learned from the sector, there are very few … actors who play a big part in why there are so many shocking price spikes at the pump.”

The WSPA criticized the special session as unnecessary. Catherine Reheis-Boyd, the industry association’s CEO, said the state should be focused on retaining its refiners, which have dropped from 30 to nine since the 1990s.

“We don’t need a rushed special session to address the needed infrastructure and investment that we should be talking about to keep refineries running and producers producing,” Reheis-Boyd told KQED. “In our opinion, the conversation should be focused on production, on pipelines, on ports and all that impact on refineries.”

As time ran out on the regular legislative session, Newsom had found himself locked in a stalemate with lawmakers over his energy agenda and whether to call the special session, which Senate President Pro Tem Mike McGuire (D–Healdsburg) was initially firmly against.

Republicans and labor groups also opposed the bill, and it did not receive universal support from Newsom’s own party.

Almost a fourth of Senate Democrats did not support the bill — Sen. Melissa Hurtado (D–Sanger) joined Republicans in voting against it, and eight Democrats abstained or were absent. The bill passed the Senate on Friday with a 23–9 majority.

In the previous Assembly vote, Assemblymembers Jasmeet Bains (D–Delano) and Esmeralda Soria (D–Fresno) joined Republican lawmakers opposing the bill, while 44 voted in favor. The other 17 lawmakers abstained.

While Newsom has touted the bill as a way to protect consumers from surging gas prices, Reheis-Boyd argued that it could increase prices if refiners are forced to maintain a reserve. She said there should be more focus on the fees and taxes Californians pay on gas.

Lee, however, said that those costs don’t add to the volatility ABX2-1 is designed to address.

“Conservatives and the oil companies love to blame taxes and fees and regulations, but those things are very constant,” he said. “What isn’t constant is if the consumer goes to the pump one week and it’s one price and then another week, it’s 10% more, and another week it’s 5% less.”

Lee previously told KQED that Assembly hearings throughout the session have shown that these spikes and dips are due to oil availability and that without inventory concerns, “there should be much lower prices” for Californians.

Assemblymember Gregg Hart (D–Santa Barbara), who introduced the bill, told KQED earlier this month that part of the reason the bill is needed is because the number of refiners in California will only continue to decline as the state moves to phase out gas cars.

“We will have constraints that occur with fuel supply as these steps in the ladder go down and refineries are closed,” he said. “We have to manage this collaboratively with the oil industry and figure out a way to smooth that out and make it work for consumers.”

Newsom said that now, the CEC will meet to assess the oil market and supply demands, look at health and safety concerns raised by refinery workers, and more to ultimately come up with the right standards.

“I don’t want to overstate, I don’t want to overpromise, but we now have the tools,” he said.