CA Gas Price Spike Prevention Law Signed By Newsom: What To Know

CALIFORNIA — Gov. Gavin Newsom just signed a law to prevent gas price spikes — a move the governor says will save Californians billions at the pump. '

It will prevent sudden surges in pump prices by altering fuel refinery storage rules to help prevent fuel shortages in the future, according to the bill text.

The law will give the state the authority to require oil refiners to maintain a minimum inventory of fuel and to have resupply plans ahead of a maintenance outage. Such outages create higher gas prices and higher profits for the industry, Newsom's office said.

California has the highest gas prices in the nation due to taxes and environmental regulations. The average price for a regular gallon of gas was $4.67 on Monday, compared to the national average of $3.20, according to AAA.

"Price spikes have cost Californians billions of dollars over the years, and we’re not waiting around for the industry to do the right thing — we’re taking action to prevent these price spikes and save consumers money at the pump," Newsom wrote in a statement.

ABx2-1, ceremoniously signed by Newsom surrounded by legislators on Monday, was somewhat controversial for the rushed special session it ushered on the heels of the regular session. But Newsom, who called for the session on Aug. 31, said the bill was "urgently needed."

The state's new law was spurred by findings from the Division of Petroleum Market Oversight, which said that price spikes are overwhelmingly caused by refiners not backfilling supplies when stations go down for maintenance.

Newsom says the bill would have saved Californians hundreds of millions at the pump if it had been in effect last year.

An opponent of the bill, the Western States Petroleum Association, argues that the law will fail to save Californians money and that it serves as a smokescreen for increases the state knows is coming.

"Legislators still fail to understand our industry or what drives high gas prices," CEO Catherine Reheis-Boyd said. "Regulators remain fixated on controlling businesses with more taxes, fees, and costly demands."

Some lawmakers, like Democratic assemblywoman Esmeralda Soria, voted against ABx2-1, arguing that taking a risk on new regulations could result in higher gas prices, The Hill reported.

The bill has been controversial not just for its rushed session but for concerns over how the state's new oversight over refinery maintenance could negatively impact workers as the bill will hand the California Energy Commission the ability to approve scheduled maintenance.

Those representing unionized workers also say the new law could spur closures and job loss if storage requirements are unworkable for refiners.

"It is our workers that perform the safety maintenance at California’s refineries, including at Chevron. As such, we have a first- hand, boots-on-the-ground knowledge of what happens and what doesn’t happen at California’s refineries," a statement from several unions reads.

But proponents of the bill disagree.

“Let me be clear, ABX2-1 does not prohibit a refinery from conducting important maintenance. Refiners can and should perform the maintenance they need to to keep their workers and facilities safe,” Assemblymember Gregg Hart, a Santa Barbara Democrat and one of the bill’s authors, said at an Oct. 7 state Senate hearing, according to CalMatters.