Written by by Katy Grimes at californiaglobe.com
If the ‘Big Oil’ companies are so greedy, why are they only greedy in California and not greedy in every state?
California’s Assembly Democrats voted Tuesday to pass Governor Gavin Newsom’s proposal to decrease the state’s gas supply, which will clearly result in even higher gas prices at the pump.
Californians are already paying the highest gas prices in the entire country – even higher than Hawaii, according to AAA today.
Texans pay $2.73 per average gallon of gas. That’s a difference of nearly $2.00 per gallon that Californians pay a premium for.
California Governor Gavin Newsom called for a special legislative session after accusing California’s oil refineries of price gouging. The governor claimed that “Gas price spikes on consumers are profit spikes for oil companies, and they’re overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance.”
ABX2-1 will give the California Energy Commission more authority to impose new mandates for oil storage requirements on oil refineries in California, even as California is on the verge of an energy crisis with the push for electrification by 2035, as John Kabatek, California State Director, National Federation of Independent Business warned last week. “The regulation requirements in ABX2-1 will artificially create a fuel shortage crisis due to limiting the distribution of fuel.”
Catherine Reheis-Boyd, President and CEO of the Western States Petroleum Association shared her statement over passage of ABX2-1 today in the Assembly:
“Today’s vote on ABX2-1 represents false progress. Many critical questions about how this mandate will actually work—and at what cost to consumers and refinery workers—remain unanswered. Until lawmakers roll up their sleeves and engage in the hard work of finding real solutions, Californians will continue to pay the price for rushed, incomplete policies.
“As California’s special session unfolds, the notion of mandating refineries to store fuel supplies may seem like a simple fix to price spikes, but the reality is far more complex. The math behind this proposal is incomplete and fails to address key operational questions. For example, how many days of supply will refiners be forced to withhold from the market? What will the storage costs be? And crucially, what happens if a price spike never materializes—are Californians then stuck paying more year-round for no reason?
“This theory of cost savings is just that—a theory. Without a deep understanding of the complexities of refinery operations, policymakers are gambling with consumers’ wallets. We, as an industry, are ready to roll up our sleeves and address the root causes of California’s volatile energy market, which has been shaped by decades of policies. We call on legislators to do the same. Californians deserve solutions grounded in reality, not rushed ideas pushed through during a special session. This bill lacks the time, detail, and diligence required to truly address the problem.
“We must take the time to find a better way forward—one that balances the need for affordable energy with the complexities of our energy infrastructure, rather than relying on untested economic theories that put consumers at risk.”