California targets fuel price surges with mandatory gas reserves

California Governor Gavin Newsom Thursday floated a plan requiring oil refiners to maintain minimum reserves of gasoline to prevent price spikes.

The California Energy Commission said that, on 63 days last year, California refiners maintained less than 15 days of gasoline supply—a situation in which the agency contends that spiked prices cost drivers $650 million.

“Price spikes at the pump are profit spikes for Big Oil. Refiners should be required to plan ahead and backfill supplies to keep prices stable, instead of playing games to earn even more profits," Newsom, a Democrat, said in a release.

It was not clear when the plan could take effect and Newsom's office did not immediately respond to a request for comment.

The plan, which the industry has blasted as an attack on producers, would require California's oil refiners to demonstrate resupply plans sufficient to make up for expected losses in production when their plants are undergoing maintenance work.

The state of California determined that 2023 gasoline prices spiked largely due to refineries going offline without properly planning to backfill supplies.

It comes three months after the US Department of Energy sold its 1 million barrel Northeast gasoline reserve, which Washington created after Superstorm Sandy in 2014 left motorists scrambling for fuel supplies. The US Congress mandated the sale following criticism that the reserve was too expensive to maintain and did not boost energy security.

California, the most populous US state, is home to some of the country's highest average gasoline prices, and it has a loveless relationship with oil corporations. The state keenly aspires to adopt electric cars. It is also the sole state exempted by the federal environmental regulator from setting its own vehicle emissions regulations.

This month, US oil company Chevron said it was moving its headquarters to Houston from San Ramon, California.

In a statement, Catherine Reheis-Boyd, president and CEO of the Western States Petroleum Association, described Newsom's plan as "nothing more than a political attack on consumers and our industry."

"To impose new operational mandates on energy producers based on such falsehoods is regulatory malpractice, and ignores the logistical challenges and costs associated with such a plan,"shesaid.