Gov. Newsom and California Regulators Propose Takeover of Oil Refineries

California’s commitment to a greener future has led to ambitious initiatives to reduce fossil fuel consumption. As the state transitions to zero-emission vehicles (ZEVs) and a robust mass transit system, traditional oil refineries face closure due to dwindling demand.

With some of California’s nine oil refineries likely to shutter, the remaining refineries could gain increased pricing power. This scenario raises concerns about potential gas price surges.

To counteract market concentration, the California Energy Commission (CEC) has proposed a radical solution: establishing state-owned refineries. The state could purchase and operate these facilities to control gasoline supply and prices.

Despite the potential benefits, the CEC questions whether state-owned refineries might hinder an orderly phase-out of fossil fuels.

Another proposed measure involves increasing oil imports to ensure a steady supply of California-specific gasoline (CARBOB).

The CEC is shaking things up by recommending new regulations that would require refineries and terminals to keep contingency reserves of gasoline.

California’s plan to ban the sale of purely gas-powered passenger vehicles by 2035 marks a significant step toward its green agenda. However, the transition will be gradual, with millions of petroleum-fueled vehicles expected to remain on the roads beyond 2035.

The state’s aggressive push toward ZEVs and cleaner transportation fuels must be balanced with the economic realities of maintaining a reliable and affordable fuel supply.

Californians already pay higher than the national average for gasoline, partly due to stringent state and federal air quality mandates.

The CEC’s multi-faceted approach combines state ownership, increased imports, and regulatory measures to create a comprehensive strategy for energy stability.

While the transition to electric and other zero-emission vehicles will greatly reduce demand for fossil fuels, it is important to also consider the impact on the other side of the coin — the oil and gas industry.

California’s journey toward a sustainable energy future is full of challenges and opportunities.

In a late-minute proposal, Newsom has offered an alternative for Big Oil. The California governor called on California lawmakers to pass new requirements on oil refiners during the final week of the legislative season.

The proposal follows Newsom’s long-running climate change program that blames the oil industry for its negative impact on the climate and the wallets of California residents.

However, not everyone agrees that putting a price cap on Big Oil will solve the problem residents of the state face at the pumps. Democrats believe that they will need more information before they agree to pass the legislation.

This is Newsom’s first time trying to penalize oil companies. Last year, Democratic legislators passed a law that established new transparency requirements for the oil industry.

The law established a Division of Petroleum Market Oversight within the Energy Commission. With the authority to gather new data from the industry, the division has the power to investigate why prices spike.

The division also argued that oil companies did not maintain enough refined gasoline to backfill the shortcomings of production or unplanned maintenance.

While this report provides some of the information Democratic lawmakers are seeking, other lawmakers remain unconvinced by Newsom’s proposal.

“If Newsom was serious about bringing down prices, he would streamline the approval process for new gas storage projects, stop pushing new regulations that will add even more costs, and make it easier to produce energy here in California,” Gallagher said in a statement.

Gallagher has been extremely vocal about his opposition to the proposal, and Democratic lawmakers are sitting on the fence. Many are questioning how they will respond to the bill, introduced too late in the legislative process.

Newsom plans to discuss the proposal with legislative leaders before turning it into a bill, which he will introduce to lawmakers by the end of August.

The same day lawmakers followed through on their end of an agreement made with the oil industry to halt overturning a law that prevents drilling new oil and gas wells near homes, schools, parks, and hospitals, Newsome introduced this bill.

California is trying hard to fight climate change and fix the economic woes of the residents as major businesses move out of the state, taking jobs and their cold hard cash to more business-friendly states.