By Timothy Gardner
(Reuters) – California Governor Gavin Newsom on Thursday proposed a plan that would require oil refineries to maintain minimum gasoline reserves in an effort to prevent price spikes.
The California Energy Commission said California refineries had fewer than 15 gasoline supplies on 63 days last year, a situation it said pushed up prices and cost drivers $650 million.
“Pump price spikes are profit spikes for Big Oil. Refineries should be required to plan ahead and replenish inventories to keep prices stable, instead of playing games to make even more profits,” Newsom, a Democrat, said in a news release.
It was unclear when the plan might go into effect and Newsom’s office did not immediately respond to a request for comment.
Under the plan, which has been criticized by the industry as targeting producers, California oil refiners would be required to demonstrate resupply plans sufficient to cover production losses when their plants undergo maintenance work.
California found that gasoline prices rose sharply in 2023, largely because refineries went offline without making sufficient plans to replenish supplies.
The plan comes three months after the U.S. Department of Energy sold its 1 million barrel Northeast gasoline reserve, which Washington created after 2014’s Superstorm Sandy left motorists scrambling for fuel supplies. The U.S. Congress ordered the sale after the reserve was criticized for being expensive to maintain and for not increasing energy security.
California, the most populous U.S. state, is home to some of the highest average gasoline prices in the country and has a fraught relationship with oil companies. The state has ambitious goals for electric car adoption and is the only state to receive a waiver from the federal environmental regulator to set its own vehicle emissions regulations.
This month, American oil company Chevron (NYSE:) said it would move its headquarters to Houston from San Ramon, California.
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 operating mandates on energy producers based on such falsehoods is regulatory malpractice and ignores the logistical challenges and costs associated with such a plan,” she said.
