In a bold move to combat escalating gas prices, California Governor Gavin Newsom has signed a bill that grants his administration the power to regulate the state’s oil refineries. This legislation, known as ABX 2 1, is a direct response to concerns about price gouging and a dwindling supply of fuel, and it marks a significant shift in California’s ongoing battle with affordability.
The bill, which is set to come into effect in January 2024, mandates that oil companies take proactive measures to prevent price surges caused by maintenance issues or low supply levels. This means that refiners will be required to maintain adequate gasoline reserves and share their resupply plans with the state. The California Energy Commission will be tasked with overseeing this process.
Newsom, a Democrat, has repeatedly criticized the oil industry for its role in rising gas prices. He has accused them of profiteering from the situation, stating, “They have been raking in unprecedented profits because they can.” Newsom went even further, accusing the industry of raising gas prices to “scare voters” into supporting former President Donald Trump. This move underscores the escalating tension between the state government and the oil industry, particularly as California actively transitions towards a future powered by renewable energy sources.
The Western States Petroleum Association, representing major oil companies like ExxonMobil, Marathon Petroleum, and HFSinclair, has responded to the legislation by stating their willingness to work with the state to address the real issues driving up fuel prices. However, the association also expressed its frustration with the political maneuvering surrounding the issue, stating that it is time to stop playing politics and focus on practical solutions.
This legislation is a direct response to concerns raised by California’s Division of Petroleum Market Oversight Director Tai Milder, who expressed alarm at some refineries’ failure to maintain adequate gasoline levels or import enough fuel to compensate for production shortfalls. The state’s actions are not limited to regulation. Last year, California filed a lawsuit against major oil companies, including Exxon Mobil Corporation, Shell PLC, BP P.L.C., ConocoPhillips, Chevron Corporation, and the American Petroleum Institute. The lawsuit alleges that these companies concealed the dangers of fossil fuels for decades, resulting in significant climate change-related damages.
With average gas prices exceeding $6 per gallon in recent years, the new law is expected to curb price spikes and provide some relief to California residents. The legislation signals a shift in the power dynamics between the state and the oil industry, as California seeks to ensure a stable and affordable energy future for its citizens.