California Moves to Empower Regulators to Control Gas Price Spikes

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Democratic Governor Gavin Newsom’s administration introduced a new bill on Tuesday aimed at granting state regulators enhanced powers to control gasoline price spikes. The proposed legislation would enable the California Energy Commission (CEC) to enforce storage requirements on oil refiners, a measure designed to prevent supply shortages that could lead to sudden increases in gas prices.

The bill, circulated among Assembly lawmakers by Newsom administration officials, comes in response to growing concerns over volatile gas prices in California, which often rise sharply when refineries undergo planned maintenance or face unexpected outages. "This is about ensuring that Big Oil cannot manipulate the market to extract more money from Californians," Newsom emphasized in a statement.

The new legislation builds on existing efforts to provide more oversight of the state’s fuel market. The bill language, obtained by POLITICO, specifically allows the CEC to mandate minimum storage levels for gasoline and requires refiners to develop resupply plans during periods when production is reduced. This approach aims to create a more stable supply and reduce the risk of price spikes.

Legislative Amendments and Co-Authorship

The proposal seeks to amend Senate Bill 950, originally authored by State Senator Nancy Skinner (D-Berkeley). The initial version of S.B. 950 addressed prisoner release protocols, but the new amendment pivots to focus on energy market regulations. Assemblymember Gregg Hart (D-Santa Barbara) has also joined as a co-author of the amended bill, indicating broad legislative support within the Democratic Party for measures to increase transparency and stability in California's gas market.

"Californians faced outrageously high gas prices last year, prices that strained family budgets an extra $600 or more a month," Senator Skinner remarked earlier. The amended bill's focus on gasoline storage and resupply is intended to prevent a repeat of such financial strain.

A Step Toward Regulatory Control

The bill is seen as a continuation of Governor Newsom's efforts to hold oil companies accountable for gas price volatility in California. The Governor's administration has pointed out that California often faces some of the highest gasoline prices in the nation, partially due to the state's unique environmental regulations and the lack of sufficient reserves during refinery downtimes.

Catherine Reheis-Boyd, President and CEO of the Western States Petroleum Association, criticized the bill, stating, "To impose new operational mandates on energy producers based on such falsehoods is regulatory malpractice, and ignores the logistical challenges and costs associated with such a plan."

Despite industry opposition, supporters of the legislation argue that it will provide much-needed oversight and transparency in a market that has long been criticized for its lack of regulation and accountability. The proposal to amend S.B. 950 and empower the CEC with storage and resupply authority is expected to be a significant step in addressing California's chronic gas price surges.

Next Steps

As the bill language continues to circulate among Assembly lawmakers, it remains to be seen how the legislative body will respond to the proposed changes. If passed, this legislation would mark a significant shift in California’s approach to managing its energy markets, potentially serving as a model for other states facing similar challenges.