California Governor Gavin Newsom has once again taken aim at Big Oil, signing a new bill aimed at holding oil refineries accountable for what he calls price-gouging tactics that have cost Californians billions of dollars over the years. The legislation, which passed the California Assembly with a 41-16 vote, introduces strict regulations for oil refineries and promises heavy fines for non-compliance. But critics warn that this bold move could lead to a surge in gas prices and even cause some refineries to leave the state altogether.
The bill, known as ABX2-1, was co-authored by Assemblymembers Gregg Hart and Cecilia Aguiar-Curry and Senator Nancy Skinner. It is designed to prevent sudden price spikes at the pump by ensuring that refineries maintain a minimum fuel inventory, especially during maintenance outages. Under the new law, refineries that fail to comply with these regulations could face fines of up to $1 million per day.
In a statement after signing the bill, Newsom declared that California is done waiting for the oil industry to “do the right thing.” He accused Big Oil of “screwing” Californians for decades through price hikes and supply manipulations. The governor framed the bill as an essential step in preventing these sudden price increases, which, according to him, have disproportionately affected working-class Californians.
“We’re taking action to prevent these price spikes and save consumers money at the pump,” Newsom said in a press release. He framed the measure as a way to protect consumers and ensure the state’s energy security.
However, not everyone is convinced that the legislation will have the intended effect. Many opponents, including several lawmakers and industry experts, argue that the new regulations will only lead to higher gas prices for California residents. They point out that the hefty fines refineries face will likely be passed down to consumers, driving up the cost of fuel in an already expensive market.
The departure of major refineries from the state also adds to these concerns. Phillips 66, one of the largest refineries in California, recently announced it will cease operations in Los Angeles in response to the new bill. Mark Lashier, chairman and CEO of Phillips 66, cited the bill’s impact on market dynamics and long-term sustainability as reasons for their decision. The company is now exploring land development opportunities for its Los Angeles property instead of continuing refinery operations.
Chevron, another major player in California’s energy sector, has also reacted to the regulatory climate by moving its corporate headquarters from California to Houston, Texas. The oil giant’s departure signals a growing trend of companies leaving the state due to its stringent business regulations, and this latest bill has only added fuel to that fire.
Despite the mounting criticism, Newsom remains firm in his stance. He points to California’s unique environmental and consumer protections as reasons for keeping pressure on the oil industry. His administration contends that, in the long run, the legislation will lead to more stable gas prices by preventing supply shortages and encouraging more responsible business practices from refineries.
Supporters of the bill argue that California’s high gas prices are due, in part, to refinery practices that limit fuel supply to maximize profits. They claim the legislation is necessary to curb these manipulative tactics and provide relief to consumers who have seen gas prices in the state soar above the national average for years.
The California Energy Commission (CEC), which will oversee the implementation of the new rules, has been authorized to require refineries to plan for fuel resupply during maintenance periods. This is intended to prevent the sudden supply shortages that often lead to price spikes.
However, opponents see the situation differently. Some lawmakers believe the bill is just another example of government overreach that will hurt ordinary Californians. Four Democratic legislators voted against the measure, while many others abstained from voting altogether, signaling discomfort with the potential economic fallout of the new regulations.
The energy sector’s departure from California could also have broader implications for the state’s economy, particularly for regions like Los Angeles that depend on refinery jobs and related industries. As companies like Phillips 66 leave the state, there are growing concerns about job losses and the overall impact on local communities.
Governor Newsom, however, has remained defiant, even finding a way to shift some of the blame for California’s high gas prices to the previous Trump administration. In various speeches, he has pointed to federal energy policies and corporate greed as key contributors to the state’s ongoing energy challenges.
As the debate over ABX2-1 continues, Californians are left wondering whether Newsom’s plan will deliver on its promises or lead to unintended consequences. While the governor aims to protect consumers from price spikes, the exodus of major refineries and the looming threat of higher gas prices raise important questions about the future of energy in the state.
The bill’s impact remains to be seen, but for now, both sides are preparing for what could be a long and contentious battle over California’s energy future.
