Group says oil storage mandates could lead to artificial shortages and higher gas prices in CA

Photo byThe HD Post

CALIFORNIA – The Assembly approved, September 26, Governor Gavin Newsom’s proposed oil storage mandates for refineries – ABX2-1, that he says will prevent gas price spikes.

“There’s a reason why leaders from across our state are supporting our plan to prevent gas price spikes — we’re all impacted when Big Oil fleeces us at the pump,” said Newsom.

These leaders include Consumer Watchdog, La Raza Community Resource Center, Asian Pacific Environmental Network, SEIU California, California Nurses Association, United Domestic Workers and the mayors of Inglewood, West Hollywood, Redondo Beach, Fresno, Moreno Valley, Irvine, Southgate and Fullerton.

The bill allows the state to require oil refiners to manage a minimum inventory of fuel to avoid supply shortages that Newsom says creates higher gasoline prices for consumers – and higher profits for the industry.

Artificial shortages and higher gas prices

Opponents say the proposal poses serious risks that would ultimately lead to higher prices at the pump.

“Requiring refiners to maintain a minimum inventory would force them to withhold fuel from the market, reducing available supply during crucial times,” said the California Fuels + Convenience Alliance (CFCA) in a statement.

They go on to say that the bill fails to address California’s unique summer and winter gasoline blend requirements, potentially resulting in unusable reserves during periods of high demand.

The alliance also mentions a concern that foreign entities could exploit the state's reliance on imported fuel during shortages, manipulating prices to their advantage.

“CFCA stands ready to work with the Legislature on alternatives that can promote greater stability in California’s fuels market without adding more costs that are ultimately shouldered by consumers at the pump,” said CFCA.

Floor vote next week

The Assembly special session committee on oil and gas approved the proposal with a 13-2 vote -- three Democrats abstained and one Republican was absent.

Special sessions are typically called to address urgent issues that cannot wait until the next regular session, such as budget crises, or emergency responses.

The oil storage mandate proposal will go to a floor vote next week.

To read the full bill visit https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320242AB1

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