California’s New Gas Law: A Pump Price Nightmare for Arizona and Nevada?

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Bipartisan pushback as Nevada and Arizona governors urge California's Governor Newsom to halt legislation they say will hike fuel prices across state lines.

CARSON CITY, Nev. — In an unusual bipartisan alliance, Nevada Governor Joe Lombardo (R) and Arizona Governor Katie Hobbs (D) have come together to call on California Governor Gavin Newsom (D) to reconsider Assembly Bill ABX2-1, a piece of legislation that could have sweeping effects on gas prices in the western region. The bill, currently under discussion in California’s special legislative session, is aimed at regulating refinery inventory supplies but has raised alarm among neighboring states.

In a joint letter sent to Governor Newsom, Governors Lombardo and Hobbs emphasized the potentially disastrous impact of the proposed legislation on fuel prices in Nevada and Arizona. Citing a recent report from the California Energy Commission (CEC), the two governors warned that the bill could "artificially create shortages in downstream markets" and result in significantly higher costs for consumers outside of California, particularly in their own states.

A Bipartisan Appeal to California: Avoid Regional Economic Disruption

Governors Lombardo and Hobbs, representing two states that have historically taken different political paths, have found common ground on this critical issue. They argue that ABX2-1 is not just a California problem but a regional one that threatens to destabilize fuel markets across state lines.

“The people of Nevada and Arizona should not have to foot the bill for California’s misguided policies — especially when it comes to higher gas prices,” Governor Lombardo said in a statement, calling attention to the bipartisan nature of the issue. “Lowering fuel costs is a bipartisan issue, and I’m grateful to partner with Governor Hobbs as we fight back against policies that will raise prices and cause regional economic disruption."

Governor Hobbs echoed these sentiments, underscoring the economic challenges already facing Arizona residents. “Arizonans are struggling with the high cost of living, we can’t afford yet another price hike,” Hobbs said, adding that the potential disruptions to Arizona’s gasoline supply could undermine the state’s economic growth.

The Threat of ABX2-1: Higher Prices at the Pump and Economic Fallout

The crux of the governors’ argument is based on the potential unintended consequences of ABX2-1. Originally introduced as SB 950, the bill aims to regulate California’s refinery inventory supply, ostensibly to address the state’s internal fuel issues. However, according to the CEC report referenced by Lombardo and Hobbs, the legislation could inadvertently trigger fuel shortages in neighboring states by disrupting supply chains that serve Nevada and Arizona, where a significant portion of gasoline is sourced from California refineries.

For Arizona and Nevada, which already face higher-than-average gas prices due to their dependence on California's refineries, this legislation could cause further price spikes. By reducing the available gasoline supply or limiting market flexibility, ABX2-1 risks creating a ripple effect that would hit consumers at the pump hardest. "This conclusion alone is deeply troubling and warrants bipartisan, regional communication on this legislation before proceeding,” the letter from the two governors reads.

A Call for Regional Cooperation on Energy Solutions

In their letter, Governors Lombardo and Hobbs urged Governor Newsom to delay further action on ABX2-1 until more comprehensive policy discussions can take place, involving both industry leaders and regional stakeholders. They offered the expertise of their respective state energy offices—the Arizona Governor’s Office of Resiliency and the Nevada Governor’s Office of Energy—to work collaboratively on finding viable energy solutions that would benefit the entire region.

The joint appeal highlights the importance of cross-border cooperation when addressing issues that have broad regional impacts. By working together, the governors hope to influence California’s legislative process, steering it away from policies that could harm their states’ economies.

California’s Special Session: A Flashpoint for Fuel Regulation

ABX2-1 is just one part of a broader set of legislative efforts by California to address its ongoing fuel supply and pricing challenges. Governor Newsom has been vocal about the need for reforms, particularly in light of California’s frequent spikes in gasoline prices, which are often blamed on the state's stringent environmental regulations and market manipulation by refineries. Newsom has argued that stricter regulations on refinery practices are necessary to stabilize California’s volatile fuel market and protect consumers.

However, neighboring states like Nevada and Arizona, which are directly affected by California's fuel policies due to shared refinery supply chains, argue that such legislation has the potential to do more harm than good if it is not carefully crafted with regional implications in mind.

What’s Next for ABX2-1?

The future of ABX2-1 remains uncertain as California’s special session continues. However, with mounting opposition from neighboring states and growing concerns about the potential economic fallout, the legislation may face increased scrutiny before moving forward. For now, Governors Lombardo and Hobbs have put a spotlight on the broader regional implications of California's energy policies, urging a more thoughtful and collaborative approach to legislation that impacts the entire Western fuel market.

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