Western Governors Oppose Gavin Newsom’s Gas Bill Pushing Venezuela-like Price and Inventory Controls on Oil Refineries

In a joint letter issued today (see below) to California Governor Gavin Newsom (D), Nevada Governor Joe Lombardo (R) and Arizona Governor Katie Hobbs (D) urged Newsom to have “regional communication” regarding Asssembly Bill ABX2-1 and other legislation related to refinery inventory supplies that is under consideration in California’s special legislative session.

As 88 percent of Nevada’s fuels are delivered via pipeline and truck from refineries in California, the governors’ warn of the “grave impacts” on fuel prices and inventory if refineries are forced to comply with Venezula-like mandates:

Though we may have varying policy agendas as governors, we all share a sincere care for the concerns and well-being of our constituents. Undoubtedly, we too all share concerns about the high cost of fuel and its impact on communities across our states. However, we’re concerned that mandating refinery inventory would directly raise the cost of fuel for all of our constituencies and create further economic instability in the region.

Further amplifying our concerns, refiners have raised the alarm that refinery inventory mandates could result in supply shortages and potential refinery shutdowns, which would have grave impacts to our shared economies and transportation infrastructure across the West.”

Despite ongoing conversations about the root causes of rising fuel costs, it is evident that increased regulatory burdens on refiners and forced supply shortages will result in higher costs for consumers in all of our states. 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.

In a recent report by the California Energy Commission (CEC), the CEC notes that the legislation “may artificially create shortages in downstream markets,” which would ultimately raise costs for consumers in Arizona and Nevada.

Our sister site, the California Globe reports:

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.”

“The people of Nevada and Arizona shouldn’t have to foot the bill for California’s misguided policies — which is why I’m partnering with @GovernorHobbs to fight against higher gas prices from California,” Governor Joe Lombardo stated on X (formerly Twitter).

Originally published in the Nevada Globe.