Please try another search
© Reuters. FILE PHOTO: Gas prices are advertised at a Chevron station as rising inflation and oil costs affect the consumers in Los Angeles, California, U.S., June 13, 2022. REUTERS/Lucy Nicholson/File Photo
By Erwin Seba
(Reuters) - California can begin regulating how much profit the state's oil refiners can earn on selling gasoline beginning this summer under that Governor Gavin Newsom signed into law on Tuesday.
“With this legislation, we’re ending the oil industry’s days of operating in the shadows," said Newsom, a Democrat, after signing the bill. Oil companies had opposed the measure that starting June 26 empowers the California Energy Commission to set a state gross gasoline refining profit margin, and to levy penalties for exceeding it.
"California took on Big Oil and won. We’re not only protecting families, we’re also loosening the vice grip Big Oil has had on our politics for the last 100 years.”
Chevron (NYSE:CVX), the largest oil refiner by volume in the state, called the measure "a step backward" and its approval "likely to result in less reliable, less affordable fuel for state motorists," said spokesperson Ross Allen.
Energy investment firm Tudor Pickering & Holt said this week that independent refiner PBF Energy (NYSE:PBF) has the largest single exposure in the California market with 32% of its refining capacity in the state.
PBF did not respond to a request for comment.
"Refiners will also have to report more information to the watchdog," said Matthew Blair, Tudor Pickering's managing director of refiners, chemicals, and renewable fuels research.
California is the largest U.S. market for motor fuels but has some of the highest retail prices. It is isolated from Gulf Coast and Midwest refining centers, so is more reliant on a shrinking number of West Coast refineries and fuel imports from Asia and Europe.
Those limits make the state vulnerable to plant outages and spikes in crude oil prices such as the summer and fall of 2022.
The law will do nothing to increase gasoline supply to the West Coast, said John Auers, managing director of Refined Fuels Analytics. "It won't do any good and it will do harm."
The uncertainty of possible penalties will weigh on the industry, said David Hackett, chairman of fuels consulting firm Stillwater Associates.
"I think that's exactly what they are doing: Death by a thousand cuts."
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.