California Governor Gavin Newsom has proposed a plan requiring oil refiners to maintain minimum reserves of gasoline in an effort to prevent price spikes. The California Energy Commission highlighted that on 63 days last year, California refiners held less than 15 days of gasoline supply, resulting in price spikes costing drivers $650 million. Newsom criticized the oil refiners for prioritizing profits over stable prices and called for the implementation of a plan to keep prices steady.
Under the proposed plan, California’s oil refiners would need to demonstrate resupply plans to address potential production losses during maintenance work on their plants. The plan was developed in response to the 2023 gasoline price spikes caused by refineries going offline without adequate plans to replenish supplies. It is currently unclear when the plan will be implemented, and details about timelines were not provided by Newsom’s office.
This proposal comes shortly after the U.S. Department of Energy sold its 1 million barrel Northeast gasoline reserve created post-Superstorm Sandy in 2014. The sale was mandated by the U.S. Congress, citing high maintenance costs and limited increase in energy security. California, known for high gasoline prices and ambitious electric car targets, has long had a troublesome relationship with oil companies. Chevron’s recent decision to move its headquarters from San Ramon to Houston adds to the tension.
Catherine Reheis-Boyd, president and CEO of the Western States Petroleum Association, criticized Newsom’s plan as a political attack on consumers and the industry. She argued that the plan is based on falsehoods and overlooks the logistical challenges and costs associated with such operations. The proposed plan has raised concerns in the industry due to potential impacts on operations and additional costs.
In conclusion, Governor Newsom’s proposal to require oil refiners to maintain minimum reserves of gasoline aims to prevent price spikes in California. The plan, developed in response to past price spikes caused by refinery shutdowns, may face challenges in implementation due to industry opposition. The ongoing tension between the state and oil companies highlights the complexities of regulating the energy sector to protect consumers and promote stable prices.