California Senate passes bill aimed at preventing gas price spikes

[October 12, 2024]  By SOPHIE AUSTIN

SACRAMENTO, Calif. (AP) — The California state Senate passed a measure Friday to prevent gas prices from spiking in a state where it is notoriously expensive to fill up at the pump.

The proposal, backed by Democratic Gov. Gavin Newsom, would give energy regulators the authority to require that refiners keep a certain amount of fuel on hand. The goal is to try to keep prices from increasing suddenly when refiners go offline for maintenance. Proponents say it would save Californians billions of dollars at the pump.

The bill was inspired by findings from the state's Division of Petroleum Market Oversight, which demonstrated that gas price spikes are largely caused by increases in global crude oil prices and unplanned refinery outages.

State Sen. Nancy Skinner, a Democrat representing Berkeley, said the proposal is about saving money for consumers.

“While global crude prices are not something we can control, a shortage of refined gasoline is something that we can prepare for,” she said.

Newsom unveiled the legislation in August, during the last week of the regular legislative session. But lawmakers in the state Assembly said they needed more time to consider it. The governor called the Legislature into a special session to try to pass it.

The bill needs final approval by the state Assembly before it can reach Newsom's desk.

It has received intense pushback from Republican lawmakers, labor groups and the oil industry. Some opponents say it could unintentionally raise overall gas prices and threaten the safety of workers by giving the state more oversight over refinery maintenance schedules. They argued delaying necessary maintenance could lead to accidents.

The Western States Petroleum Association criticized Newsom and the Democratic lawmakers supporting the bill, saying it would not benefit consumers.

“If they were serious about affordability, they’d be working with our industry on real solutions," Catherine Reheis-Boyd, the group's president, said in a statement. "Instead, they’re forcing a system they don’t understand, and Californians will pay the price.”

The San Francisco-Oakland Bay Bridge rises behind the price board of a gas station in San Francisco on July 20, 2022. (AP Photo/Jeff Chiu, File)

Californians pay the highest rates at the pump due to taxes and environmental regulations. The average price for regular unleaded gas in the state is about $4.67 per gallon as of Friday, compared to the national average of $3.21, according to AAA.

Republican state Sen. Brian Dahle said there shouldn't have been a special session to weigh the proposal, because the bill does not do anything urgent. The proposal fails to address the state taxes and regulations that contribute to higher gas prices, he said.

“So, who's making the money?” Dahle said. “Who's gouging Californians for every gallon of gas? It's the government.”

Last month, governors representing Nevada and Arizona, which import gas from California, sent a letter urging Newsom to reconsider the proposal. They said at the time they were concerned it could increase prices in their states.

It’s not the first time Newsom has tried to apply pressure on the Legislature to pass oil and gas regulations. He called a special session in 2022 to pass a tax on oil company profits. The governor then said he wanted a penalty, not a tax. The law he ended up signing months later gave state regulators the power to penalize oil companies for making too much money.

McGuire, a Democrat representing the North Coast, said the bill lawmakers advanced Friday would help address a problem that drastically impacts people's lives.

“Putting mechanisms in place to help prevent costs from spiking and sending family budgets into a tailspin benefits us all, and working together, we’ve been able to do just that,” he said in a statement.

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