Newsom celebrates political victory on gas price spike bill, but concerns remain about policy

At a campaign rally in the Coachella Valley, former President Trump on Saturday called out California’s cost of living and nation-leading gas prices as an example of Vice President Kamala Harris and other “radical Democrats” destroying the state.

“Today California has the highest inflation, the highest taxes, the highest gas prices, the highest cost of living, the most regulations,” he said. “We’re not going to let Kamala Harris do to America what she did to California.”

Two days later at the state Capitol, Gov. Gavin Newsom celebrated the passage of a new state law that could lower gasoline price spikes by giving regulators the authority to require that California oil refiners store more inventory.

Newsom and Democratic lawmakers cast the bill as a solution to high gas prices. With less than three weeks until the Nov. 5 election, affordability has become a major political issue and a potential vulnerability for Harris’ presidential campaign.

“It’s about time we stood up,” Newsom said after he signed the bill on Monday. “This is the fourth largest market in the world. This is a big damn deal.”

The newly passed law gives Newsom a win in his political battle with the oil industry, but whether Harris or other Democratic candidates will benefit from the governor’s victory remains unclear.

Newsom’s law will not immediately lower the cost of gasoline in California. While experts say it could ultimately offer reductions of future price spikes, regulators will have to complete a thorough review process to enact the new controls.

Governors in Arizona and Nevada wrote letters warning that the legislation could drive up costs for their constituents, potentially bolstering concerns in pivotal swing states about California’s policies.

Newsom called lawmakers back to Sacramento for a special session to pass the policy. At the same time, however, his administration is expected to adopt stricter limits on carbon fuels that could drive up per-gallon costs by almost half a dollar or more just days after the election.

The governor declined to answer a question at a news conference about whether he thought the new law would affect Democrats in the election, arguing that the effort wasn’t about politics. In a video posted to social media minutes before he signed the bill into law on Monday, Newsom accused the industry of being in “cahoots” with Trump by intentionally pushing prices higher to scare voters during election season.

Opponents have cast his push to address gas prices as an example of “political theatrics.”

“This is politics, not policy,” said Catherine Reheis-Boyd, chief executive of the Western States Petroleum Assn. “This is a show. This is anything but good policy.”

Newsom and the petroleum trade group have been locked in a political battle over gas prices since the summer of 2022. The governor ran ads in Florida calling out Gov. Ron DeSantis’ conservative policies, which prompted a response from the petroleum group blaming Newsom for California’s highest-in-the-nation gas prices.

Since then the governor has repeatedly accused the industry of intentionally gouging consumers.

His administration has pointed out that prices spike when refineries experience unplanned maintenance problems with their equipment, which limits the amount of gasoline available in the state and drives up prices. Requiring the refineries to increase fuel reserves, his administration says, will help prevent those shortages.

Reheis-Boyd has argued that requiring refineries to store more gasoline will increase costs for the companies and drive up prices at the pump. The industry contends that California’s nation-leading gasoline costs are a supply and demand problem in a state that has adopted environmental policies to limit oil drilling and production.

The cheapest way to lower gas prices is to allow oil companies to increase crude oil production in California and rely less on supply from overseas, Reheis-Boyd said.

The state should be working closely with California’s small number of refineries to ensure the state has enough gasoline, instead of adopting new regulations that restrict profits and pushing the companies out of business, she said.

“We have a governor who isn’t interested in the conversation,” Reheis-Boyd said. “He’s the only governor I’ve never met with, because he won’t meet.”

This year marks the second time in two years that Newsom has pushed lawmakers to adopt new oil regulations, an issue that divides Democrats as they navigate desires to fight climate change and lower gas prices.

In 2023, lawmakers balked at passing Newsom’s proposal to penalize oil companies that earn excessive profits. Instead lawmakers adopted new oversight of the industry and gave regulators the ability to cap profits through a rule-making process that has yet to result in any new restrictions.

Democrats in the Legislature were reluctant to pass Newsom’s new oil bill again this year.

Two weeks before the regular session concluded at the end of August, Newsom announced a proposal to require that petroleum refiners maintain a stable inventory in order to prevent fuel shortages and price spikes when refinery equipment is taken offline for maintenance.

Assembly Speaker Robert Rivas (D-Hollister) refused to take up the bill for a floor vote at the end of session, arguing that his caucus did not want to rush legislation through without properly vetting the policy. He agreed to work on the proposal in a special session.

Senate President Pro Tem Mike McGuire (D-Healdsburg) took the opposite approach. His caucus was ready to pass the bill at the end of session, he said, and he initially refused to participate in a special session before giving in to the governor’s demands.

During the special session, the Assembly held a series of hearings before passing the bill earlier this month. The Senate quickly signed off on the proposal the following week.

While some liberal Democrats quietly fumed as the governor forced them to vote on another one of his political proposals, many felt the policy could ultimately reduce price spikes that hurt consumers.

“The data is clear: Price spikes happen when refineries fail to plan for supply during scheduled maintenance,” said Assemblymember Gregg Hart (D-Santa Barbara). “This bill will hold oil companies accountable for resupply plans when refineries’ shutdowns occur, ultimately saving Californians billions at the pump.”

Several Democratic legislators competing for swing-district seats in November did not vote, or opposed the bill.

State Sen. Dave Min (D-Irvine), who declined to vote on the proposal, said he supported the goal to address the problem of high gas prices in the state but did not agree with the approach. Min is locked in a tight race for Congress against Republican Scott Baugh in Orange County.

Min said opponents to Newsom’s proposal “raised serious concerns” about whether it would be effective in lowering gas prices or even be counterproductive.

“These concerns deserve a fair and full vetting, which is difficult to do in a special session conducted just weeks before many of the current legislators will be leaving office,” Min said in a statement.

Republicans said Democrats would reduce gas taxes if they were serious about the problem of affordability.

“So, who’s making the money?” asked state Sen. Brian Dahle (R-Bieber). “Who’s gouging Californians for every gallon of gas? It’s the government. $1.42 for every single gallon of gas goes to taxes, whether it’s state, local or federal.”

Opposition to the proposal from labor unions representing workers in the industry added to the pressures on Democrats.

Tom Baca, the international vice president for western states of the International Brotherhood of Boilermakers, said giving regulators control over maintenance schedules, instead of relying on the insight of the workers with deep knowledge of the equipment, could put his members in dangerous conditions if work is delayed.

David Sikorski, business manager for the International Union of Operating Engineers Local 12, called the special session “unnecessary.”

His union represents 21,000 workers in California, Arizona and Nevada. He said Newsom’s policy could prove to be a liability to Harris in the neighboring swing states of Arizona and Nevada.

“We’ve made some real momentum, hit the ground running in Arizona, and we put a lot of resources into getting friendly politicians, and Kamala Harris, elected in that state,” he said. “This is just one more hurdle that we have to overcome with our membership and working people in general.”