AMERICAS OIL: Newsom Wants to Work with Refiners to Keep a Lid on Gas Prices

Newsom Wants to Work with Refiners to Keep a Lid on Gas Prices

• Bloomberg reports California Governor Gavin Newsom now wants the energy commission to work with the oil industry on maintaining fuel supply and refining in the state.
• The governor told Siva Gunda, vice chair of the California Energy Commission, to work closely with refiners, including through “high-level, immediate engagement,” to ensure affordable and reliable supply, according to a letter seen by Bloomberg News. He asked that Gunda reinforce the state’s “openness to a collaborative relationship.”
• PADD 5 and California especially are remote markets from the rest of the country due to geography and a lack of pipelines connecting the USWC to the producing areas of the US. Thus, they pay the highest gasoline prices in the US, and oil output has been plunging for most of the past four decades.
• California has enacted legislation including bill SB X1-2, which authorized the state energy commission to determine an acceptable profit margin for in-state refiners and penalize those that exceed it. More recently, bill AB X2-1 has mandated increased reporting requirements by the state’s refiners. Those rules have been met with ire from the oil industry, which has consistently warned that the state’s fuel supply is growing unreliable.
• Just in the last year, Chevron moved its headquarters to Texas, and Phillips 66 announced the closure of its Los Angeles refinery. Last week, Valero announced plans to idle, repurpose or cease operations at its 145,000 b/d Benicia refinery near San Francisco by the end of April 2026. As a result, California will lose almost one-fifth of its crude-processing capacity in the next 12 months.