Senate Bill X1-2, the California Gas Price Gouging and Transparency Law, protects Californians from experiencing price gouging at the pump by oil companies. The law was signed by Governor Gavin Newsom in March 2023 and took effect June 2023.
This came after consumers experienced some of the highest gasoline prices ever recorded in California in fall 2022. The law helps the state understand and respond to gasoline price spikes. The law includes transparency and oversight measures to increase accountability of the petroleum industry. It provides additional resources to support long-term planning efforts.
The law:
- Authorizes the California Energy Commission (CEC) to set a maximum gross gasoline refining margin and a penalty for refiners that exceed it.
- Increases transparency by providing new data collection authority and creates an independent division to monitor petroleum markets and flag potential market manipulation.
- Requires an assessment of transportation fuel demand and discussion of methods to ensure an adequate, affordable, and reliable fuel supply as the state transitions away from petroleum fuels.
The key implementation activities that the law calls for fall under four areas, which are reporting, assessment, oversight, and investigation. The CEC’s Energy Assessments Division is taking the lead on implementing the reporting and assessment activities. The Division of Petroleum Market Oversight (DPMO), which is an independent division within the CEC, is responsible for carrying out the activities focused on oversight and investigation.
Assembly Bill (AB) X2-1, the Reducing Gasoline Price Risks Law, passed in October 2024, enhances SB X1-2.
AB X2-1:
- Authorizes the CEC to require refiners to develop resupply plans during maintenance outages to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry.
- Authorizes the CEC to require oil refiners to maintain a minimum inventory of fuel that could help prevent price spikes, which the CEC estimates cost Californians more than $1 billion in 2023.
- Expands the Transportation Fuels Assessment to evaluate California’s future petroleum product and crude oil import needs and identify the steps needed to ensure that marine infrastructure and port facilities can accommodate those needs.
- Adds an annual reporting requirement for the CEC to assess the impact of any new policies on California gasoline supply and price.
