Sacramento, CA…Governor Gavin Newsom and Assembly Speaker Robert Rivas announced legislation to prevent gasoline price spikes, as part of the Governor’s special session on gas prices.  The legislation, which will soon be introduced by joint authors Assembly member Cecilia Aguiar-Curry and Assembly member Gregg Hart, tackles the problem of gasoline price spikes at the pump — and would save Californians hundreds of millions, if not billions, of dollars annually.

On Saturday, Governor Newsom convened a special session of the legislature to make oil refiners manage California’s gasoline supply responsibly and save Californians money at the pump.

“I’m glad to see the Assembly is moving this important proposal forward to save Californians hundreds of millions of dollars at the pump. Gas price spikes are profit spikes for Big Oil, and California won’t stand by as families get gouged.” Governor Gavin Newsom
“We must stop oil companies from raking-in record profits at the expense of Californians,” said Speaker Robert Rivas (D-Salinas). “During this important special session, the Assembly will convene public hearings that thoroughly vet proposals. We’ll hear from experts and ensure that the public has a voice in the process. I’m committed to delivering solutions that rein-in soaring gas costs and provide real savings at the pump.”

“Our Assembly understands the assignment, and that is to do everything in our power to lower the cost of living in our state,” said Majority Leader Cecilia Aguiar-Curry (D-Winters). “I appreciate Speaker Rivas taking action to address gas price spikes and ensuring legislation gets the public hearings and consideration that Californians deserve.”

“When gas prices spike because of supply constraints, everyday Californians suffer and the oil industry profits. This legislation will protect California consumers by ensuring refineries maintain a stable fuel supply,” said Assemblymember Gregg Hart (D-Santa Barbara). “This bill is a common-sense solution. By requiring oil companies to better plan for refinery shutdowns, we can save Californians a lot of money from reduced gas prices.”

Principal co-authors of the bill include the following Assemblymembers: Dawn Addis (D-Morro Bay), Steve Bennett (D-Oxnard), Isaac Bryan (D-Los Angeles), Corey Jackson (D-Riverside), Ash Kalra (D-San Jose), Alex Lee (D-San Jose), Jim Wood (D-Healdsburg).

Gas price spikes on consumers are profit spikes for oil companies, and they’re overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance.

During a recent workshop, officials from the California Energy Commission (CEC) and the Division of Petroleum Oversight (DPMO) presented data showing the urgent need for Governor Gavin Newsom’s new proposal to protect Californians from price spikes.

If this proposal had been in effect last year, Californians could have saved hundreds of millions — if not billions — of dollars at the pump as evidenced by this DPMO analysis:

Preventing gas price spikes

The Governor’s special session is focused on passing the Governor’s plan to save Californians money at the pump. It would authorize the California Energy Commission (CEC) to require petroleum refiners to maintain a minimum inventory of refined fuel throughout the distribution chain to avoid supply shortages that create higher prices at the pump for consumers. It would also authorize the CEC to require refiners to plan for resupply during scheduled refiner maintenance. Text of the proclamation calling for a special session is available here.

Following gasoline price spikes in 2022, Governor Newsom called for a special session and worked in partnership with the Legislature to sign into law a package of reforms holding Big Oil accountable, including the creation of a new independent watchdog, the Division of Petroleum Market Oversight. That agency found that higher gasoline prices last September were caused by a suspicious market transaction, refiners scheduling maintenance without properly preparing for it such as ensuring they could backfill supply to make up for lost production, and more.

In January of this year, the watchdog sent Governor Newsom and the Legislature a letter outlining specific proposals to reform California’s gasoline spot market, which included a minimum inventory requirement to prevent price spikes due to lack of a stable gasoline supply.

The state’s gasoline price watchdog also found that, in 2023, gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies, which caused refining margins to spike as spot and retail prices jumped — indicating that refinery margins made up the largest proportion of the price spikes between July and September 2023.