By Wes Venteicher, POLITICO
CHECK BACK IN SPRING: Oil refiners’ profits are safe, at least for now, from the California Energy Commission.
The agency said today that it’s again delaying its decision on whether to impose a first-in-the-nation cap on refiners’ profits.
It had been scheduled to make the decision this fall, then delayed to the end of the year and now expects to put out a preliminary proposal in the spring, spokesperson Lindsay Buckley said in an email today.
Gov. Gavin Newsom first pitched a profit cap on refiners (opens in new tab) back in 2022, after California gasoline prices spiked to an average of $6.44 per gallon. Newsom accused oil companies of “gouging” Californians and pledged to put a stop to it with his proposed cap.
The law tasked the CEC with deciding whether such a cap would indeed help with gas prices (the oil industry says it won’t) and then deciding how high to set the cap if it’s warranted.
That same law, though, led to a revelation at the CEC: The price spikes they had observed were linked to supply shortages at refineries that typically coincided with planned or unplanned maintenance outages. Newsom took aim at that dynamic with another law (opens in new tab) — passed during a second special session this fall — that gives the CEC authority to require refiners to store more gas to try to avoid the spikes.
The industry doesn’t like that either, saying it could exacerbate shortages and drive prices up even further.
So now the agency gets to decide if and how to do both the profit cap and the storage requirements — and it’s going to take some more time to figure out how the two would interact, Buckley said.
“Staff is currently assessing how resupply and minimum inventory rules could interact with a potential maximum margin and penalty with plans to present a high-level framework next year,” she said in the email.
The cap’s biggest supporter, Jamie Court of Consumer Watchdog, says there’s no need for delay. He even brought President-elect Donald Trump into it.
“The penalty has been studied to death,” he said. “I think frankly they’re concerned about rocking the boat with Trump in office, and that is no way to protect the people of California.”
Not so, says the governor’s office.
“We’re not turning back from a clean energy future and requiring transparency from the oil industry,” Newsom spokesperson Daniel Villaseñor said in an email. “Thanks to the governor’s two special sessions on oil, we’re making real progress and working with the industry to implement reforms that promise to save consumers at the pump.”
Western States Petroleum Association CEO Catherine Reheis-Boyd said the agency should spend more time with the numbers behind the proposals.
“The data does not support the narrative, so I don’t know what they would come out with at this point in time anyway,” she said.
It’s not clear if either proposal would be in place by price-spike season in September. Buckley said the preliminary proposals would come out together in the spring and the CEC will go from there. — WV
