In March 2023, Governor Gavin Newsom signed Senate Bill X1-2 into law after it was passed by the California State Legislature in December 2022. The law officially became effective on June 26, 2023.
Governor Newsom has introduced legislation aimed at putting an end to what he refers to as “illegal gouging by greedy oil companies.”
The state of California has taken a pioneering step in the fight against price gouging with the implementation of its unique legislation. While other states have attempted to follow suit, such as Washington, which tried to pass similar legislation this year but was unsuccessful, there is hope that they may try again in 2025.
According to State Senator Joe Nguyen from White Center, “We collaborated with the Western States Petroleum Association to determine the best approach for crafting the legislation and whether it would be feasible.”
As per the information available on Newsom’s website, California’s proposed legislation will mandate the publication of daily market reports to reveal any instances of real-time price manipulation.
The industry was monitored by the Division of Petroleum Market Oversight, which acted as a watchdog group.
As of Tuesday, Californians are experiencing the highest gas prices in the United States, with an average of over $5 per gallon. In certain regions of California, the average price is even higher, exceeding $6 per gallon.
Nguyen has proposed a legislation that aims to set price-controls on transportation fuels in Washington. This legislation would mandate the Washington Utilities and Transportation Commission to collect comprehensive pricing, profit margin, and transaction information from fuel suppliers, refinery operators, and other stakeholders in the transportation fuels supply chain.
The governor, Legislature, and public would receive an analysis and report on the data collected by UTC. This would include information on retail fuel prices, industry profits, and major firms within the industry.
Nguyen expressed her candid opinion, stating that their policy was more thoughtful due to the increased buy-in they had.
The legislation failed to make any progress, but what were the reasons behind it?
Nguyen clarified that the session was brief as the budget office requirements are endless. It can be challenging when a fiscal note returns with a cost of tens of millions of dollars.
According to him, the discussion on providing oversight to the oil industry will persist as it is crucial for their regulation.
He said that there are irregular patterns of behavior in terms of pricing, where it fluctuates frequently between high and low.
AAA reports that the average gas price in Washington was $4.48 per gallon on Tuesday. San Juan County paid the highest price at $5.28 per gallon.
As of June 4th, the average cost per gallon nationwide stands at $3.52.
In a letter addressed to the California Energy Commission, Chevron Americas Product President, Andy Walz, expressed concerns that the price-control law could potentially discourage investments in the energy market of the region.
Nguyen strongly disagreed with that evaluation.
“I don’t have any affection for Chevron,” he expressed. “However, it’s notable that while they were earning record profits, they were also carrying out stock buybacks. Therefore, it’s possible that Chevron’s $48 billion stock buyback could have an effect on fuel prices.”
Nguyen admitted that the most suitable authority to manage these regulations is likely to be the Federal Trade Commission rather than at the state level.
According to him, the most challenging aspect for Washington is the federal Commerce Clause. He explained that they cannot take any action that would unjustly favor or disadvantage a particular company in the state when compared to others.
Nguyen pointed out that the absence of refineries in Washington is also a contributing factor.
According to him, the limited number of refineries in the area makes us vulnerable to shortages and maintenance problems.
There are a total of five refineries located in Washington. These refineries can be found in Blaine, Ferndale, Anacortes, and Tacoma, with two refineries situated in Anacortes.
