What you need to know: New measure will help prevent price spikes that cost Californians upwards of $2 billion last year, giving the state more tools to require that petroleum refiners backfill supplies and plan ahead for maintenance.
October 15, 2024 - SACRAMENTO – On Monday, surrounded by legislators and community leaders in the rotunda of the California State Capitol, Governor Gavin Newsom signed legislation to help prevent gas price spikes and save consumers money at the pump.
The legislation — ABX2-1 authored by Assemblymembers Gregg Hart and Cecilia Aguiar-Curry and Senator Nancy Skinner — allows the state to require oil refiners to maintain a minimum inventory of fuel to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry. It also authorizes the California Energy Commission to require refiners to plan for resupply during refiner maintenance outages. A signing message can be found here.
“Price spikes have cost Californians billions of dollars over the years, and we’re not waiting around for the industry to do the right thing — we’re taking action to prevent these price spikes and save consumers money at the pump. Now, the state has the tools to make sure they backfill supplies and plan ahead for maintenance so there aren’t shortages that drive up prices. I’m grateful to our partners in the Senate and Assembly for acting quickly to push this forward and help deliver relief for Californians.”
Governor Gavin Newsom
“With this new law, big oil companies are now responsible for stabilizing prices at the pump. It’s a critical accomplishment, but our work is not done. I will continue to fight to lower the cost of living, because housing, groceries and everyday necessities must be more affordable for all Californians.” — Assembly Speaker Robert Rivas (D-Salinas)
“Today, we’re coming together to provide needed relief at the pump and help keep hard-earned dollars in the pockets of Californians. I’m grateful to Governor Newsom, Speaker Rivas, and members of the Senate and Assembly for taking swift action on this critical issue. That said, our work isn’t stopping. We’re going to continue to grind away to help lower the cost of living for folks in every corner of the Golden State. It’s a necessity.” — Senate President pro Tempore Mike McGuire (D-North Coast)
Why it’s needed
Price spikes at the pump are profit spikes for oil companies, and they’re overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance. If this proposal had been in effect last year, Californians could have saved hundreds of millions — if not billions — of dollars at the pump according to analysis from the Division of Petroleum Market Oversight (DPMO):
Experts have come out in support of this measure, including Stanford economists who praised the proposal for being “an economically sound policy that addresses an important problem in a well-targeted way” and the “additional supply would free up refinery capacity to serve Nevada and Arizona, also reducing prices in these markets.”
Supporters of the bill include mayors, local leaders, consumer organizations, environmental advocates, labor, business leaders and consumer groups. Last month, the Governor and supporters met and discussed how gasoline price spikes affect millions of Californians’ everyday lives, and shared why this plan will help California families.
How we got here
The Governor convened a special session to focus on saving Californians money at the pump. The proposal authorizes the California Energy Commission (CEC) to require petroleum refiners to maintain a minimum inventory of refined fuel throughout the distribution chain to avoid supply shortages that create higher prices at the pump for consumers. It also authorizes the CEC to require refiners to plan for resupply during scheduled refiner maintenance. The text of the proclamation calling for a special session is available here.
Following gasoline price spikes in 2022, Governor Newsom called for a special session and worked in partnership with the Legislature to sign into law a package of reforms holding Big Oil accountable.
California’s new watchdog found that higher gasoline prices were caused by a suspicious market transaction, refinery maintenance without properly preparing for it, and more.
In January of this year, the watchdog sent Governor Newsom and the legislature a letter outlining specific proposals to reform California’s gasoline spot market, which included a minimum inventory requirement to prevent price spikes due to lack of stable supply.
The state’s gasoline price watchdog also found that, in 2023, gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies, which caused refining margins to spike as spot and retail prices jumped — indicating that refinery margins made up the largest proportion of the price spikes between July and September 2023.
Convening experts, community leaders, and consumer advocates
The Governor today also announced his appointments to the Independent Consumer Fuels Advisory Committee:
Martha Dina Arguello, of Los Angeles, has been appointed to the Independent Consumer Fuels Advisory Committee. Arguello has been Executive Director at Physicians for Social Responsibility – Los Angeles since 2007. She was Director of Health and Environmental Programs at Physicians for Social Responsibility – Los Angeles from 1999 to 2007. Arguello is Co-Founder and Co-Chair of Standing Together Against Neighborhood Drilling and Californians for a Health and Green Economy. She is a member of the California Air Resources Board AB 32 Environmental Justice Advisory Committee and the Steering Committee of Californians for Pesticide Reform. This position does not require Senate confirmation and the compensation is $100 per diem. Arguello is a Democrat.
Michael Jorgenson, of Mill Valley, has been appointed to the Independent Consumer Fuels Advisory Committee. Jorgenson has served as Supervisory Deputy Attorney General at the California Department of Justice, Office of the Attorney General since 2018. He was Deputy County Counsel IV at the Marin County Counsel’s Office from 2017 to 2018. Jorgenson served in several roles at the California Department of Justice, Office of the Attorney General from 2003 to 2017, including Deputy Attorney General in the Public Rights Division, Supervising Deputy Attorney General in the Civil Division and Deputy Attorney General in the Civil Division. He was an Associate at Berman Tabacco from 2001 to 2003 and at Kelly Gill Sherburne & Herrera from 1999 to 2001. He earned a Juris Doctor degree from the University of San Francisco School of Law and a Bachelor of Arts degree in Economics and History from University of Michigan. This position does not require Senate confirmation and the compensation is $100 per diem. Jorgenson is a Democrat.
Neale Mahoney, of Stanford, has been appointed to the Independent Consumer Fuels Advisory Committee. Mahoney has been a Professor of Economics at Stanford University since 2020. He was a Special Policy Advisor for Economic Policy at The White House from 2022 to 2023. Mahoney was a Professor of Economics at the University of Chicago from 2013 to 2020. He earned a Doctor of Philosophy degree in Economics from Stanford University and a Bachelor of Science degree in Applied Mathematics and Economics from Brown University. This position does not require Senate confirmation and the compensation is $100 per diem. Mahoney is a Democrat.
Deborah “Debbie” Meeks, of Walnut Creek, has been appointed to the Independent Consumer Fuels Advisory Committee. Meeks has been Manager of United States West Coast Policy and Business Coordinator at Shell USA since 2021. She was a Manager of Alliances and Portfolios at Shell US Retail from 2017 to 2021. Meeks was Americas and Mexico Regional Manager, Principal Account Executive, and Senior Account Manager at Shell Catalysts and Technologies from 1995 to 2017. She earned a Bachelor of Science degree in Chemical Engineering from California State University, Long Beach. This position does not require Senate confirmation and the compensation is $100 per diem. Meeks is a Democrat.
Norman Rogers, of Santa Ana, has been appointed to the Independent Consumer Fuels Advisory Committee. Rogers has been Second Vice-President at United Steelworkers Local 675 since 2021, and a Plant Operator in Oil Movements at Marathon Petroleum Corporation since 2018. He was a Plant Operator for Oil Movements at Tesoro Refinery from 2013 to 2018. Rogers was a member of the Fire Brigade at the Carson Refinery from 2001 to 2021. He was Plant Operator for Oil Movements at BP from 2001 to 2013, and at Arco Refinery from 1999 to 2001. This position does not require Senate confirmation and the compensation is $100 per diem. Rogers is registered without party preference.
Astrid Zuniga, of Modesto, has been appointed to the Independent Consumer Fuels Advisory Committee. Zuniga has been President at United Domestic Workers/AFSCME 3930 since 2024 and was Vice President from 2016 to 2024. She has been Executive Secretary/Treasurer at the Stanislaus and Tuolumne Central Labor Council since 2013, and an In-Home Support Services Caregiver since 1998. Zuniga is a member of the California Democratic Party Executive Board and the Women’s Advisory Committee for AFSCME International. This position does not require Senate confirmation and the compensation is $100 per diem. Zuniga is a Democrat.
Source: Office of the Governor
