California Gov. Gavin Newsom proposed a plan Thursday that would require oil refiners to maintain minimum gasoline reserves in an effort to prevent price spikes.
The California Energy Commission said there were 63 days last year when California refiners held less than 15 days of gasoline supplies, a situation it said sent prices soaring and cost drivers $650 million.
“Price spikes at the pump are profit spikes for Big Oil. Refiners should be forced to plan ahead and replenish inventories to keep prices stable, rather than playing for 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 targeting producers, California oil refiners will have to demonstrate they have adequate replenishment plans to deal with production losses when their plants undergo maintenance.
California found that gasoline prices spiked in 2023 largely because refineries went offline without adequately planning for refueling.
The plan comes three months after the U.S. Department of Energy sold its 1 million-barrel Northeast gasoline reserve, created by Washington after 2014’s Superstorm Sandy left motorists scrambling for fuel. Congress ordered the sale after criticism that the reserve was expensive to maintain and did not improve energy security.
California, the most populous state in the U.S., has some of the highest average gasoline prices in the country and has had a difficult relationship with oil companies. The state has ambitious goals for electric vehicle adoption and is the only state with a waiver from the federal environmental regulator to set its own vehicle emissions regulations.
This month, U.S. oil company Chevron 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 is 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,” he said. (Reporting by Timothy Gardner; Editing by Josie Kao)
