California Governor Gavin Newsom is seeking to extend the state’s legislative session into September in order to pass legislation that would further regulate the oil and gas industry. Newsom claims that this legislation is necessary to combat “greedy” oil companies that are allegedly responsible for the state’s high gas prices.
However, critics argue that the real cause of California’s high gas prices is the state’s own regulations, including the nation’s highest gas tax, environmental regulations that require a unique gasoline blend, and a cap-and-trade regime that raises costs on refineries. Despite this, Newsom and the Democratic Party continue to blame oil companies for the high prices, with Newsom previously stating that they are “ripping you off” and “raking in record profits at your expense.”
Newsom’s proposed legislation would give the California Energy Commission the power to issue new regulations detailing minimum fuel-reserve requirements for each refinery. He claims that this would help avoid short-term supply shortages that cause gas price spikes. However, Chevron has responded to the proposal with a scathing letter, pointing out that the regulations would create safety risks and unnecessary costs that would likely be passed on to consumers.
The letter from Chevron President of Americas Products Andy Walz notes that building new storage facilities to meet the proposed regulations could take a decade and cost $35 million. This would only serve to raise gas prices further, rather than lowering them as Newsom intends.
California Senate President Pro Tempore Mike McGuire is refusing to honor Newsom’s call for a special session, but this appears to be more of a power play than a principled stand against Newsom’s efforts to regulate the oil industry. McGuire has already lined up the necessary Democratic Party votes to pass the legislation, and his refusal to respond to Newsom’s call for a special session seems geared towards embarrassing the governor.
The move is seen as a sign of Newsom’s waning influence within the Democratic Party, particularly with Vice President Kamala Harris now seen as the party’s nominee. However, critics note that the Democrats seeking to replace Newsom are just as socialist as he is, and that the state’s oil industry will likely continue to be subject to increasing regulation and control.
