California Democrats are railing against state regulators for economic conditions they helped unleash now that a possible gas price crisis looms.
California’s Committee on Utilities and Energy grilled several state regulators on Wednesday about a possible gas price spike as two major oil refineries in California prepare to close, according to local news outlet KCRA. Despite their outrage, California Democrats have targeted the fossil fuel industry for years by creating a stringent regulatory climate, and energy companies — including their refining capacity — are withdrawing from the state, setting the table for a potentially massive 75% jump in gas prices.
We have a crisis on our hand that may have been self-created by the actions perhaps taken by the state, by regulators,” Democratic Assemblyman David Alvarez of San Diego said on Wednesday at the hearing, according to KCRA.
“I know what climate leadership does not look like, and that is $10 gas,” Democratic Assemblyman Cottie Petrie-Norris told regulators at the hearing.
California has the highest average per-gallon gas price at the pump compared to any other state, according to AAA gas price data. Meanwhile, California regulators have suggested increasing state involvement in refinery management, including the possibility of de facto state-owned refineries.
The California Legislature has granted regulatory agencies authority to establish stringent new rules for the oil and gas industry. In recent special legislative sessions, lawmakers backed Democratic California Gov. Gavin Newsom’s efforts to create new storage and maintenance rules for refiners, according to the publication. Newsom has also called on regulators to do more to keep oil refineries in the state, though he has allowed for the creation of stringent rules that produce a hostile environment for energy producers.
The regulators were met with several questions and criticism as lawmakers voiced concerns that regulators have overlooked Californian consumers and drivers by aggressively pursuing a green energy transition, though Democratic leadership in the state allowed — and even encouraged — agencies to enact strict regulations for years.
“I think I also heard you say that another closure can lead to a significant increase in costs to consumers on the price of gas?” Alvarez asked a regulator.
Phillips 66 and Valero both announced plans to close refineries in the state in 2024, and the retiring facilities jointly account for roughly 20% of California’s refining capacity, according to KCRA.
Refineries have been shutting down in California for years, and no new major oil refineries have come online in the state since 1969, according to the California Energy Commission. California’s “cap-and-trade” program, combined with its unfavorable tax environment and its low carbon fuel emission standard, are often highlighted as restrictive regulations pushing refineries to leave the state.
“In the two years since the Governor signed California’s gas price gouging law, the state has avoided severe gasoline price spikes like the historic 2022 spike, saving Californians billions of dollars at the pump,” a spokesperson for Newsom’s office wrote to the Daily Caller News Foundation. “The law established the nation’s first state-level independent petroleum watchdog to hold Big Oil accountable, and the state has more transparency from the industry than ever before.”
A Phillips 66 spokesperson told the DCNF that the energy company “wants to continue to be a trusted and deliberate partner with the state.”
“We’re also not exiting California, still owning and operating various assets that will serve California commercial and customer demands, including the Rodeo Renewable Energy Complex,” the spokesperson, who also referred the DCNF to the company’s October 2024 press release, added.
The California Air Resources Board, the California Energy Commission, the Division of Petroleum Market Oversight, Alvarez’s office, Petrie-Norris’ office, Valero and California’s Committee on Utilities and Energy did not respond to the DCNF’s requests for comment.
Editor’s note: This story has been updated to reflect the comment from the Phillips 66 spokesperson.
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