California Governor Gavin Newsom has proposed a plan that would require oil refineries to maintain minimum inventories of gasoline to prevent price increases.
According to the California Energy Commission, California refineries had less than 15 days’ supply of gasoline on 63 days last year, driving up prices and costing motorists $650 million, the commission said.
“Price increases at the pump are profit increases for Big Oil. Refiners should be required to plan ahead and build inventory to keep prices stable, instead of playing games to make even more profit,” Newsom, a Democrat, said in a news release.
It’s unclear when the plan could take effect, and Newsom’s office did not immediately respond to a request for comment.
Under the plan, which has been criticized by the industry for attacking producers, California oil refineries must have supply plans sufficient to cover production losses when their plants are undergoing maintenance.
California found that gasoline prices rose in 2023, largely because refineries went offline without adequate planning 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 Superstorm Sandy in 2014 left motorists scrambling for fuel supplies. Congress ordered the sale after the reserve was criticized as expensive to maintain and not improving energy security.
California, the most populous state in the U.S., is home to some of the highest average gasoline prices in the country and has a tense relationship with oil companies. The state has ambitious goals for electric car adoption and is the only one with a waiver from the federal environmental regulator to set up its own vehicle emissions regulations.
This month, American oil company Chevron announced that it is 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 is a regulatory malpractice and ignores the logistical challenges and costs associated with such a plan,” she said.