According to AAA, the average price of gas in California is $5.15 per gallon which is $1.73 above the national average.
The CEC says the new law is an effort to protect Californians from experiencing price gouging at the pump by oil companies.
SB X1-2 authorizes the CEC to set the highest profit margin from refining gasoline and a penalty for refiners that exceed it. In addition, the CEC says the the new law will:
- increase transparency by providing new data collection authority;
- create an independent division to monitor petroleum markets and flag potential market manipulation;
- require an assessment of transportation fuel demand.
Refinery maintenance affects fuel price
The first workshop in the series focused on the timing of refiner maintenance which the CEC says affects the price of fuel.
During maintenance, parts of the refinery may be temporarily shut down or operate at reduced capacity. This can result in a lower production of gasoline leading to a decrease in supply and gas price increases.
The transparency law allows the CEC to impose requirements on the timing of refinery maintenance which they say will minimize the impact of production losses on fuel prices.
California is a “fuel island”
According to the Western States Petroleum Association (WSPA), a nonprofit trade association that represents petroleum producers, California is a “fuel island.”
“California is a “fuel island” due to decades of constraining land use and permitting decisions paired with policies explicitly intended to reduce the State’s supply and consumption of fossil fuels (e.g., in-State oil production bans, internal combustion engine bans) – even as these fuels remain in high demand,” said WSPA President and CEO Catherine H. Reheis-Boyd.
The association says that maintenance of refineries usually requires years of planning and coordination of logistics, labor, equipment, and inventories.
“Telling our industry, or any other, when repairs and upgrades can or can’t be made compromises employee and community safety,” said WSPA to KCRA.
At the second workshop, taking place November 14, the CEC will discuss a draft of the Transportation Fuels Assessment. The assessment will cover topics that impact the price of fuels including finished fuel storage, refined fuel imports, retail market dynamics, and potential refinery closures.
The final workshop on November 28 will discuss refiner margin and penalty.
For more information about the gas price gouging workshops visit https://www.energy.ca.gov/news/2023-11/cec-holds-workshops-implementing-senate-bill-x1-2-california-gas-price-gouging