Lawmakers embark on second special session aimed at lowering gas prices

Special session proceedings started in the Assembly on Wednesday as lawmakers held informational hearings on Governor Gavin Newsom’s proposal aimed at lowering gas prices. This comes three weeks after Newsom called a special session during the final week of the legislature’s regular session on Aug 31.

The proposal, introduced as ABX2-1 by Democratic Assembly members Cecilia Aguiar-Curry of Winters and Greg Hart of Santa Barbara, would require oil refiners to maintain minimum fuel inventories to prevent shortages, and in turn, price spikes.

“When gas prices spike because of supply constraints, everyday Californians suffer and the oil industry profits,” Hart said in a statement. “This legislation will protect California consumers by ensuring refineries maintain a stable fuel supply.”

According to GasBuddy, the average cost per gallon of gas in California is approximately $4.70, about a dollar and a half above the national average at $3.20. 

Last week, the state’s Division of Petroleum Market Oversight warned consumers, saying it expects gas prices to spike this month, especially in Northern California. Department Director Tai Milder said crude oil prices are decreasing, so gas should be cheaper to produce. But dwindling fuel inventories due to refinery maintenance are having the reverse effect, he explained.

“Production is being impacted by these refinery outages,” Milder said. “They're not bringing in resupply during production and there's not enough storage, so these are in our view the root causes for these price spikes.”

The oversight division was born out of last year’s special session to bring transparency to California’s gas market. Milder said it supports the administration’s plan to alleviate high costs. 

Jaime Court with Consumer Watchdog has studied California’s gas market for decades and said rising prices during a time of low inventory lead to higher profit margins for oil refiners. The organization also supports the proposal.

“Refiners' tendency is to keep us running on empty so that when something goes wrong at a refinery their prices go up and their profits go up and we're just sick of that,” Court said. 

But Assembly Republicans want a different approach. Last week, the caucus introduced a package of bills directed at California policies regulating the oil industry’s operations in the state. 

Among the bills are ABX2-2 by Assemblymember Tom Lackey of Palmdale, which would suspend California’s gas tax. ABX2-3 by Assemblymember James Gallagher would exempt gas from the state’s Cap and Trade program. Finally, ABX2-4 by Assemblymember Joe Patterson of Roseville would block new regulations for the state’s low carbon fuel standard.

Patterson acknowledged the bills have little chance of moving forward with a Democratic supermajority.

“I know the prospects of them are pretty slim but we have to propose solutions that Californians can take a look at,” Patterson said.

Cathy Reheis-Boyd, president of the Western States Petroleum Association, said the GOP legislation is worth considering. She warned that Newsom’s proposal won’t bring prices down.

“Even discussing a minimum inventory level at a refinery takes away the operational flexibility that allows fuel to go to market,” Reheis-Boyd said. “It will have the absolute opposite effect.”

While Assembly lawmakers begin hearings this week, the Senate has yet to convene for the special session. The proposal would have to pass both chambers to be enacted this fall.