California Senate passes oil bill in special session

SACRAMENTO, Calif. (CN) — A bill that would empower the California Energy Commission to impose new oversight over gas refiners in an attempt to curb price spikes passed the state Senate on Friday.

The passage of the legislation — Assembly Bill 1, written by Assemblymembers Gregg Hart, of Santa Barbara, and Cecilia Aguiar-Curry, of Winters — is a win for Governor Gavin Newsom, who called a special session for the Legislature to grapple with prices at the pump.

The bill, which passed the state Senate 23 to 9, now advances to the Assembly for a Monday vote before it can reach the governor’s desk.

After a several changes since it was first submitted, the bill now gives the energy commission the ability to create regulations that dictate refinery maintenance schedules and minimum gasoline inventory if certain criteria are met. Instead of a mandate, those thresholds must first be achieved.

“ABX2-1 does not ask oil refineries to do anything they haven’t done before,” said state Senator Nancy Skinner, a Berkeley Democrat who carried the bill, which would sunset on Jan. 1, 2033, in her chamber.

According to Skinner, the criteria that must be met before the energy commission could impose regulations include proof that the requirements’ benefits would outweigh any negatives, that they would lead to lower average retail prices at the pump and that they would maximize existing fuel storage.

The energy commission would weigh those criteria each year to determine if regulations are warranted.

Speaking after the vote, Senate President Pro Tempore Mike McGuire said price spikes can cause Californians to pay $10 extra each time they visit the pump. That means $2 billion more dollars spent each year by Golden State residents when prices climb.

“I promised that we would be quick, we would be efficient and we would get the job done,” McGuire said, adding later: “I’m really happy this got out and it’s a great day.”

A handful of Democrats were either absent or didn’t vote. One of those was state Senator Dave Min, an Irvine Democrat, who in a Friday statement said he wouldn’t attend the special session. Saying he supported the bill’s goals, Min added that he’s concerned over its potential negative impacts. Those concerns warrant a complete vetting, not a session only weeks before many lawmakers term out.

“At the same time, I have not heard a compelling rationale as to why this bill needs to be advanced October 2024 as opposed to being heard when the Legislature reconvenes in January 2025,” Min said.

Republicans also pointed to the timing as a reason to oppose the bill, as well as questioning why Democrats failed to take up one of their bills that would have suspended the gas tax.

Fielding questions after the session, McGuire said the governor’s proclamation calling for the special session limited the Legislature’s actions.

“Repealing the gas tax is not within the scope of the proclamation,” he added.

Republicans made a point of hammering the other side on that issue, as well as the supposed need for a special session.

State Senator Brian Dahle, a Bieber Republican, noted that the bill merely gives the energy commission the ability to regulate and there was no urgency to hold a special session. He also questioned how fines for noncompliance — ranging from $100,000 to $1 million per day — would help lower gas prices

“This bill gives the [California Energy Commission] a lot of power,” Dahle added.

State Senator Shannon Grove, a Bakersfield Republican, argued the bill would have the opposite intended effect on gas prices. Additionally, instead of lawmakers deciding the issue, the bill would hand oversight power to an unelected bureaucracy. She said there’s no evidence it’ll calm price volatility.

The governors of Nevada and Arizona wrote a letter to Newsom in September, saying that Assembly Bill 1 could threaten their fuel supplies. Grove said Arizona gets some 50% of its gas from California while Nevada receives 90%. The cost of gas in both states is lower than in California.

Grove said the same supply chain and workers are used to transport the fuel, indicating that the reason for the price difference is California’s existing gas taxes.

“I’m disappointed,” Grove said after Friday’s session. “Obviously, there isn’t an urgency.”