Gov. Newsom’s ‘Economic Illiteracy’ Will Further Harm California’s Oil & Gas Industry

AAA reports today that the national average gas price is $3.22 per gallon, while the average in California is $4.56 per gallon.

Within California, the high is $6.00 per gallon in Mono County. In Newsom’s Marin County, gas is $5.13 per gallon. Humboldt County will run you $5.54 per gallon; Sacramento County is $4.91 per gallon; Los Angeles County is $4.59 per gallon.

Arizona gets nearly half of its gas from California. The vast majority of Nevada’s gas – 88% – comes from California.

The governors of Arizona and California co-signed a letter last week to California Gov. Gavin Newsom urging him to back off of his legislation to add new regulations on the state’s refiners. They say forced supply shortages will result in higher gas costs in the three Western states.

The Las Vegas Review-Journal agrees:

“Mr. Newsom’s economic illiteracy is potentially a major problem for Nevada too. The vast majority of the state’s gasoline comes from California. If Mr. Newsom’s ill-conceived regulations further limit refineries, Nevada prices could soar even higher.”

“If Mr. Newsom wants to know who to blame for California’s high gas prices, he should look in the mirror.”

Newsom claims he is “Preventing Big Oil’s profit spikes & saving Californians at the pump.”

As the Globe reported:

Gov. Gavin Newsom’s California Energy Commission regulators announced earlier this month proposed government controls of the petroleum industry, ostensibly in order to combat future energy price surges. This followed Chevron Oil company’s announcement that it will be moving its headquarters to Houston Texas from San Ramon California.

…Gov. Newsom is threatening to call a special session if lawmakers don’t pass his Venezuela-Like price controls proposal of the oil and gas industry – unless lawmakers pass his latest proposal to control California’s petroleum industry.

According to Newsom, who is sounding more like Hugo Chavez:

“The state has found that, when refiners limit gasoline supplies, prices spike at the pump and create massive profits for Big Oil. Today, Governor Gavin Newsom announced a new, first-in-the-nation proposal to further prevent price spikes and save Californians money.

Newsom’s proposal would authorize the California Energy Commission (CEC) to require that petroleum refiners maintain a minimum fuel reserve to avoid supply shortages that create higher prices for consumers. If this proposal had been in effect in 2023, Californians would’ve saved upwards of $650 million in gas costs due to refiners’ price spikes.”

No mention in Newsom’s proposal of California’s highest-in-the-nation gas taxes…

“With both of our states reliant on California pipelines for significant amounts of our fuel, these looming cost increases and supply shortages are of tremendous concern to Arizona and Nevada,” Nevada Governor Joe Lombardo (R) and Arizona Governor Katie Hobbs (D) told Gov. Newsom.

A joint letter issued last week by Nevada’s and Arizona’s Governors to California Governor Gavin Newsom, urged Newsom to have “regional communication” regarding his legislation, Asssembly Bill ABX2-1, as well as other legislation related to refinery inventory supplies that is under consideration in California’s special legislative session, the Nevada Globe reported.

As the CA Globe reported:

The Western States Petroleum Association explains how devastating the legislation would be:

“There are bad regulations, and then there are regulations so detrimental that industry experts, the California Energy Commission, and anyone with a basic understanding of economics can clearly see the harm they will cause consumers. Governor Newsom’s refinery supply mandate will create artificial shortages of fuel in California, Arizona and Nevada by forcing refiners to withhold fuels from the market. Lawmakers who vote for this mandate will be voting to increase gas costs for their constituents.”

Even the CA Energy Commission reported that Newsom’s regulatory policy contained in AB X2-1 may artificially create shortages in downstream markets.

Gov. Newsom claims that the state’s highest-in-the-nation gas taxes and prices are not what led to dramatically spiking gas/oil prices but because of price gouging by the oil industry. In May, Newsom even signed a gas price gouging law into place.

The California Energy Commission disagreed with the governor at the time, showing that gas price spikes occurred in the last few years because of refineries temporally going out of commission because not enough oil was getting to them. The CEC also said that lower prices this year were caused by many factors, including a cut in industry costs and profits, lower crude oil costs, and environmental programs, the Globe reported.

Prices could even be lower, but as the CEC noted, the only thing that went up was the gas tax itself.

The recent CEC study reported “gasoline remains California’s dominant transportation fuel, and demand is not especially responsive to short-term price spikes.”

Despite that, Newsom’s Venezuela-like state proposal would:

1. Obligate California’s petroleum refiners to demonstrate resupply plans and arrangements to the CEC that are adequate to address the loss in production from refinery maintenance.
2. Authorize the CEC to require petroleum refiners to maintain enough fuel inventory to stabilize fuel supply.
3. Impose penalties on refiners who fail to follow these requirements.

The Globe reported in August the CEC proposal of Government control of the petroleum industry:

“The State of California would purchase and own refineries in the State to manage the supply and price of gasoline,” wrote the study’s authors, with the scope of the initiative ranging from “one refinery to all refineries in the state.”

Gov. Newsom uses European Union law to justify his proposal:

“The European Union adopted an Oil Stock Directive that requires EU countries to maintain emergency stocks of crude oil and petroleum products equal to at least 90 days of net imports or 61 days of consumption, whichever is higher.”

If the “Big Oil” companies are so greedy, why are they only greedy in California and not greedy in every state? Why is gas more than $5 gallon in California and not across the country if “Big Oil” is so greedy?