By Nathan Risser, BLOOMBERG
The California Energy Commission delayed implementing a profit cap on refiners, the latest move by the state in softening its stance toward the oil and gas industry.
Gov. Gavin Newsom signed State Bill X1-2 — known as the refiner margin cap bill — into law in March 2023, giving the commission sweeping powers to determine an acceptable profit margin for fuel makers and penalize those who exceed it. The legislation sought to mitigate price spikes for drivers who regularly pay the highest pump prices in the nation. But no penalties were ever levied.
The unanimous vote Friday was as recommended in June by commission Vice Chair Siva Gunda after Newsom urged the panel in April to work with the industry to continue to supply fuel to the state after multiple refiners announced they were shutting down.
The action also establishes that if the commission enacts a margin cap before 2035, refiners can request an exemption to penalties if they can show they “made significant investments in gasoline producing units” at their California plants between 2026 and 2030.
The vote marks the latest in a series of recent policy proposals that walk back years of regulatory scrutiny on the state’s oil and gas industry. It seemed to please neither side of what in recent years has been a contentious regulatory process to address California’s fuel supply and price issues.
A representative for industry group Western States Petroleum Association told the commission the action was a step in the right direction, but fell short of a full statutory repeal of the profit cap legislation that the lobbying group wants.
Consumer advocate Jamie Court said the vote to pause a margin cap was a “tremendous abdication” and that the agency was “leaving the next governor and the people of California with nothing to do but pay more.
