California Governor Gavin Newsom has proposed a plan to address the issue of price spikes in the state’s gasoline market. The plan would require oil refiners to maintain minimum reserves of gasoline to prevent price fluctuations that harm consumers. Last year, California refiners had less than 15 days of supply on 63 days, leading to increased prices that cost drivers $650 million. Governor Newsom believes that refiners should be held accountable for planning ahead and ensuring stable prices instead of prioritizing their own profits.
Although it is uncertain when the plan will take effect, it demonstrates the state’s commitment to addressing the problem. However, the oil industry has criticized the proposal, arguing that it unfairly targets producers. Under the plan, oil refiners in California would need to develop resupply plans to address production losses during maintenance work. This requirement is a response to the spike in gasoline prices in 2023, which was largely caused by refineries going offline without adequately planning to replace the lost supplies.
The proposal comes in the wake of the U.S. Department of Energy selling its 1 million barrel Northeast gasoline reserve. This reserve was created after Superstorm Sandy in 2014, when fuel supplies became scarce. However, critics argued that maintaining the reserve was expensive and did not enhance energy security. The sale was mandated by Congress, highlighting the need for more effective solutions to address price fluctuations in the gasoline market.
California is known for having some of the highest average gasoline prices in the country, and the state has had a contentious relationship with oil companies. It has set ambitious goals for electric vehicle adoption and is the only state with a waiver to set its own vehicle emissions regulations. These efforts reflect California’s commitment to reducing reliance on fossil fuels and promoting a cleaner environment.
The recent decision by U.S. oil company Chevron to move its headquarters from San Ramon, California to Houston underscores the complex relationship between the state and the oil industry. Chevron’s relocation may be influenced by California’s stringent regulations and the perception that the state is unfriendly to oil companies.
The President and CEO of the Western States Petroleum Association, Catherine Reheis-Boyd, strongly opposes Governor Newsom’s plan. She argues that it is a political attack on consumers and the industry, and accuses the governor of spreading falsehoods. Reheis-Boyd claims that implementing new operational mandates based on misinformation is regulatory malpractice and disregards the challenges and costs associated with such a plan.
In conclusion, Governor Newsom’s proposal to require oil refiners to maintain minimum reserves of gasoline aims to address price spikes and protect consumers in California. While the plan is met with criticism from the oil industry, it reflects the state’s commitment to sustainable energy solutions and reducing reliance on fossil fuels. By planning ahead and ensuring stable prices, California can create a more resilient and consumer-friendly gasoline market.