California Governor Gavin Newsom’s Proposed Plan to Prevent Gasoline Price Spikes
By Timothy Gardner
In a move to prevent price spikes, California Governor Gavin Newsom proposed a plan requiring oil refiners to maintain minimum reserves of gasoline. The California Energy Commission revealed that on 63 days last year, California refiners had less than 15 days of gasoline supply, resulting in price spikes that cost drivers $650 million.
Newsom emphasized the need for refiners to plan ahead and backfill supplies to stabilize prices, rather than seeking additional profits from price fluctuations. The plan, which has faced criticism from the industry, would mandate California’s oil refiners to demonstrate adequate resupply plans to address production losses during maintenance work at their plants.
Recent data showed that gasoline prices in 2023 spiked due to refineries going offline without proper supply backup plans. This proposal comes after the U.S. Department of Energy sold its 1 million barrel Northeast gasoline reserve earlier this year, following criticism for its high maintenance costs and lack of energy security improvement.
California, known for having some of the highest gasoline prices in the U.S., has been pushing for electric car adoption and setting its own vehicle emissions regulations. The state’s relationship with oil companies has been strained, with U.S. oil giant Chevron recently announcing its headquarters relocation from California to Houston.
President and CEO of the Western States Petroleum Association, Catherine Reheis-Boyd, criticized Newsom’s plan as a political attack on consumers and the industry, citing regulatory challenges and costs associated with implementing the proposal.
Analysis:
California Governor Gavin Newsom has proposed a plan to require oil refiners to maintain minimum gasoline reserves in an effort to prevent price spikes. This move aims to stabilize gasoline prices and protect consumers from unnecessary price fluctuations caused by inadequate supply planning. The plan has faced criticism from the industry, highlighting the ongoing debate between regulatory measures and industry interests. The outcome of this proposal could impact gasoline prices in California and potentially influence similar policies in other states.