By Timothy Gardner
(Reuters) – California Governor Gavin Newsom on Thursday proposed a plan to require oil refiners to maintain minimum gasoline reserves to avoid price spikes.
The California Energy Commission said that for 63 days last year, California refiners maintained less than 15 days of gasoline supply, a situation it said drove up prices and cost motorists $650 million.
“Price hikes at the pump are profit hikes for big oil companies. Refiners should be forced to plan ahead and replenish their reserves to keep prices stable, instead of playing games to earn even more profits,” Newsom, a Democrat, said in a statement.
It’s unclear when the plan might take effect, and Newsom’s office did not immediately respond to a request for comment.
Under the plan, which the industry has criticized as attacking producers, California oil refiners would be required to demonstrate adequate replenishment plans to address production losses when their plants undergo maintenance work.
California saw gasoline prices skyrocket in 2023 largely due to refinery shutdowns without adequate planning to replenish supplies.
The move comes three months after the U.S. Department of Energy sold its 1 million-barrel gasoline reserve, which Washington created after Superstorm Sandy in 2014 sent motorists scrambling for fuel. Congress ordered the sale after the reserve was criticized for its cost of maintenance and lack of energy security.
California, the most populous state in the United States, has one of the highest average gasoline prices in the country and has strained relations with oil companies. The state has ambitious goals for adopting electric cars and is the only one with a waiver from the federal environmental regulator to set its own vehicle emissions regulations.
This month, American oil company Chevron announced it was moving its headquarters from San Ramon, California, to Houston.
Catherine Reheis-Boyd, president and CEO of the Western States Petroleum Association, said Newsom’s plan was “nothing more than a political attack on consumers and our industry.”
“Imposing new operational mandates on energy producers based on such falsehoods constitutes regulatory misconduct and ignores the logistical challenges and costs associated with such a plan,” she said.
(Reporting by Timothy Gardner; Editing by Josie Kao)
