On October 14, 2024, California Governor Gavin Newsom signed Assembly Bill X2-1 into law, granting the state authority to regulate oil refiners in an effort to combat high gas prices. The law allows the California Energy Commission (CEC) to mandate minimum fuel reserves and regulate refinery maintenance schedules, aiming to prevent supply shortages that contribute to price spikes.
“Price spikes have cost Californians billions of dollars over the years, and we’re taking action to prevent these increases and save consumers money at the pump,” said Newsom during the bill signing at the Capitol. He highlighted that the positive effects of the legislation could be seen as early as next summer.
Introduced by Assemblyman Gregg Hart and Majority Leader Cecilia Aguiar-Curry, the bill imposes penalties ranging from $100,000 to $1 million per day for refiners that fail to comply with the commission’s orders. Although the law does not establish specific reserve levels or timelines for maintenance, it empowers the CEC to do so starting in January 2025. The bill is set to expire in 2033.
Supporters of the bill view it as a necessary step toward stabilizing the gasoline market. “This legislation will save Californians billions at the gas pump,” said Hart. Aguiar-Curry added that it will safeguard residents from unexpected gas price surges by ensuring refineries are better prepared for shutdowns and supply disruptions.
However, critics warn that the law could lead to higher prices at the pump. Assembly Republican Leader James Gallagher argued that the bill creates new bureaucracy without solving the root causes of rising fuel costs. Others, including oil industry executives, have voiced concerns that these mandates could lead to supply shortages, with refiners facing additional costs and restrictions.
Currently, Californians pay around $4.68 per gallon, significantly higher than the national average of $3.20 per gallon. Some worry the new regulations, combined with existing state taxes and environmental policies, may further exacerbate this gap.
As the law takes effect, both proponents and opponents will closely monitor its impact on California’s gasoline market and whether it succeeds in reducing price volatility without causing unintended consequences.
