Governor Newsom signs legislation to prevent gas price spikes

 

SACRAMENTO – Today, surrounded by legislators and community leaders in the rotunda of the California State Capitol, Governor Gavin Newsom signed legislation to help prevent gas price spikes and save consumers money at the pump.

The legislation — ABX2-1 authored by Assembly members Gregg Hart and Cecilia Aguiar-Curry and Senator Nancy Skinner — allows the state to require oil refiners to maintain a minimum inventory of fuel to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry.

It also authorizes the California Energy Commission to require refiners to plan for resupply during refiner maintenance outages.

How we got here

The Governor convened a special session to focus on saving Californians money at the pump. The proposal authorizes the California Energy Commission (CEC) to require petroleum refiners to maintain a minimum inventory of refined fuel throughout the distribution chain to avoid supply shortages that create higher prices at the pump for consumers. It also authorizes the CEC to require refiners to plan for resupply during scheduled refiner maintenance. The text of the proclamation calling for a special session is available here.

Following gasoline price spikes in 2022, Governor Newsom called for a special session and worked in partnership with the Legislature to sign into law a package of reforms holding Big Oil accountable.

California’s new watchdog found that higher gasoline prices were caused by a suspicious market transaction, refinery maintenance without properly preparing for it, and more.

In January of this year, the watchdog sent Governor Newsom and the legislature a letter outlining specific proposals to reform California’s gasoline spot market, which included a minimum inventory requirement to prevent price spikes due to lack of stable supply.

The state’s gasoline price watchdog also found that, in 2023, gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies, which caused refining margins to spike as spot and retail prices jumped — indicating that refinery margins made up the largest proportion of the price spikes between July and September 2023.