Golden State Today

The special session on gas price spikes is underway, with the oil industry actively opposing measures aimed at providing relief to consumers.

SACRAMENTO – The legislature’s special session, convened to consider the Governor’s proposal to prevent gas price spikes, begins its first hearings today.

Last year’s special session revealed evidence suggesting that when Big Oil reduces supplies, it can charge higher prices and earn significant profits, leaving California consumers to bear the cost of price increases at the pump.

Instances where refineries go offline for maintenance without maintaining backup supply have led to gas price spikes. In the previous year alone, this situation cost Californians approximately $2 billion while refiners amassed $50 billion in profits.

Recently, the state’s new petroleum watchdog issued a consumer advisory warning that refinery maintenance, low inventories, and spot market volatility are again driving up California gas prices. This is occurring even as crude oil prices and national gas prices decline. These conditions were also responsible for retail gas price spikes in 2022 and 2023.

The Governor’s proposal, ABx2-1, authored by Assemblymembers Cecilia Aguiar-Curry and Gregg Hart, aims to mandate that oil refiners maintain a minimum inventory of fuel to avoid supply shortages that lead to higher gas prices for consumers and increased profits for the industry. It would also authorize the California Energy Commission (CEC) to require refiners to plan for resupply during scheduled maintenance periods.

As anticipated, the oil industry has begun countering the Governor’s plan with several claims:

1. **California’s gas tax and fees are responsible for high gas prices**:

- This claim is false. State taxes and fees are fixed and do not change when gas prices spike.

- During peak price spikes in 2022 and 2023, Californians paid significantly more per gallon than other states. The state’s taxes and fees accounted for less than half of this difference.

2. **Suspending California’s gas tax will reduce prices**:

- This claim is false. Suspending the gas tax would primarily benefit oil companies without guaranteeing savings at the pump.

- An example cited is Florida's gas tax holiday which reportedly benefited fuel companies rather than consumers.

3. **Phasing out gas-powered cars causes price spikes**:

- This claim is false. The relationship between refinery outages and price spikes predates California's major climate policies.

- Despite claims of difficulty due to transition policies, oil companies continue to report substantial profits.

4. **This proposal will restrict supply leading to shortages**:

- This claim is false. Currently, Big Oil allows supply dips that create higher pump prices.

- The proposal ensures adequate supply management during outages to prevent shortages.

5. **Building new storage tanks will drive refineries out of state**:

- This claim is false. The proposal does not require new storage tanks as existing capacity suffices.

- Oil companies already store more gasoline during winter months without needing additional storage facilities.

The proposal seeks responsible fuel inventory management by oil companies to mitigate future price spikes similar to practices in other countries.

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