California aims to tackle pump spikes by calling for gas reserves By Reuters

By Timothy Gardner

(Reuters) – California Governor Gavin Newsom on Thursday proposed a plan that would have oil refiners maintain minimum gasoline reserves in an effort to prevent price spikes.

The California Energy Commission said that on 63 days last year, California refineries maintained less than a 15-day supply of gasoline, which it said drove up prices and cost drivers $650 million.

“Pump price spikes are profit boosts for Big Oil. Refiners should be required to plan ahead and replenish supplies to keep prices stable instead of gambling to make even more profits,” Newsom, a Democrat, said in a statement.

It was unclear when the plan might take effect, and Newsom’s office did not immediately respond to a request for comment.

Under the plan, which the industry has criticized as attacking producers, California oil refineries would have to demonstrate replenishment plans that are adequate to address production losses when their plants are undergoing maintenance.

California found that in 2023, gasoline prices rose largely due to refineries going offline without adequately planning to replenish supplies.

The plan comes three months after the U.S. Department of Energy sold off its 1 million-barrel Northeast Gasoline Stockpile, which Washington built up after 2014’s Superstorm Sandy left motorists scrambling for fuel. The US Congress mandated the sale after the reserve was criticized as expensive to maintain and for not increasing energy security.

California, the most populous US state, is home to some of the highest average gas prices in the country and has had a strained relationship with oil companies. The state has ambitious goals for electric car adoption and is the only one with a waiver from federal environmental regulators to set its own vehicle emissions regulations.

This month, the American oil company Chevron (NYSE: ) said it will move its headquarters to Houston from San Ramon, California.

Catherine Reheis-Boyd, president and CEO of the Western States Petroleum Association, said Newsom’s plan is “nothing more than a political attack on consumers and our industry.”

“Imposing new operational mandates on power producers based on such falsehoods is regulatory malpractice and ignores the logistical challenges and costs associated with such a plan,” she said.