Gov. Gavin Newsom on Thursday called on the California Legislature to pass new requirements for oil refiners in the final two weeks of the legislative session, in the latest episode in his political battle with Big Oil companies.
Newsom's last-minute proposal, according to his office, would allow his administration to require oil refiners to maintain stable inventories of fuel when refineries are shut down for maintenance to prevent fuel shortages and price spikes.
The plan is a continuation of the Governor's campaign to blame the oil industry for California's high gas prices and a new attempt by Newsom to block legislation in the state Legislature. Newsom's announcement of the proposal comes nearly two years after he announced a special session on oil prices that fell short on his demands to limit oil industry profits.
“High prices at the pump are a profit surge for big oil companies,” Newsom said in a statement. “Oil refiners should be required to plan ahead and replenish supplies to stabilize prices, instead of jockeying to make more profits. Forcing oil refiners to act responsibly and maintain gas reserves will save Californians money every year at the pump.”
After Democrats balked at a proposal to impose penalties on the oil industry during the special session, lawmakers decided state regulators needed more information about oil prices to understand and stop price gouging at gas pumps.
Democratic lawmakers passed a bill last year that would impose new transparency requirements on the oil industry and give the California Energy Commission the power to set profit caps and impose fines through a regulatory process.
The legislation created an oil market watchdog within the Energy Commission and gave it the power to gather new data from the industry to study price hikes. Earlier this year, the office I wrote a letter Based on its findings so far, it recommended the state impose minimum inventory and replenishment requirements on refiners, saying oil companies were not holding enough refined gasoline to make up for production shortfalls or protect against the impacts of unplanned maintenance.
“Although this supply shortage was foreseeable and preventable, California refiners have no legal obligation to maintain sufficient supplies to adequately protect Californians from price increases,” the bureau reported.
Assembly Republican Leader James Gallagher of Yuba City criticized the governor's proposal as a “half-hearted attempt to distract from the simple fact” that state policies are causing high gas prices.
“If Newsom is serious about lowering prices, he would streamline the approval process for new gas storage projects, stop pushing for new regulations that would further increase costs, and make it easier to produce energy here in California,” Gallagher said in a statement. “Democrats have imposed the toughest regulations and highest gas taxes in the country, and that's all reflected in the price at the pump.”
For now, it's unclear whether Democrats in the Legislature will support Newsom's proposal and how they might respond if the bill comes up this late in the legislative process. The Legislature has about two weeks to act on hundreds of bills before adjourning for the year at the end of August.
Newsom's office said he discussed the plan with legislative leaders before announcing it Thursday. The proposal has not yet been introduced as a bill, only outlined in a press release by his office.
“We continue to engage with the governor on his proposal for oil market oversight,” said Nick Miller, a spokesman for Assembly Speaker Robert Rivas (D-Hollister). “Those discussions and discussions with legislators will continue.”
A spokesman for Senate President Pro Tem Mike McGuire (D-Healdsburg) did not respond to a request for comment.
Governor Newsom introduced the bill the same day that lawmakers implemented an agreement with the oil industry to end an effort to overturn a law banning the drilling of new oil and gas wells within 3,200 feet of homes, schools, parks and hospitals.
The California Independent Petroleum Association and other promoters of the referendum campaign on the setback measure agreed in late June to remove the measure from the November ballot.
As part of the compromise, Rep. Isaac Bryan (D-Los Angeles) said he agreed to limit the scope of another bill, AB 2716, which would have imposed a $10,000-per-day penalty for any “low-producing” well operating within 3,200 feet of a so-called “sensitive receptor.”Lawmakers formally amended the bill Thursday to apply only to the Inglewood field.
“As agreed, I have limited the scope of this bill to the state's largest urban oil field, located in my district,” Bryan said. “It's time for this oil field to pay penalties for the damage it has caused to the surrounding community and use those funds to invest in a sustainable future for the surrounding residents.”
He said ensuring the original setback laws go into effect immediately is “the most important environmental victory we can achieve this year.”