Nevada Republican Governor and Arizona Democratic Governor jointly wrote to California Democratic Governor expressing concerns over the bills proposed during a special oil price meeting held by Newsom last month.
According to a press release from Newsom’s office, the two governors sent a letter on September 10 in response to the special legislative session convened by California to address the “vicious problem of soaring gas station prices.”
Nevada Governor Joe Lombardo and Arizona Governor Katie Hobbs expressed in the letter, “We are both concerned about the high cost of fuel and its impact on our communities. However, we are concerned that mandating refineries to maintain inventory would directly increase fuel costs for all our voters and cause further economic instability in the region.”
The core issue mentioned in the letter is California Assembly Bill X2-1, formerly known as AB950, which failed to pass the state legislature before the deadline on September 1.
The bill aims to establish an advisory committee of six experts with the power to regulate refineries and enforce inventory requirements. By requiring refinery operators to withhold fuel from the market, the bill seeks to alleviate price spikes caused by maintenance issues at refinery facilities affecting gasoline supplies.
However, during a press conference on September 4, Newsom stated that the legislation is necessary because the “greed” of oil companies can lead to price increases at certain times. He said refinery maintenance drives up gasoline costs and boosts profits for companies conducting the maintenance, with five companies holding 90% of California’s refinery market share.
Nevertheless, the governors of two neighboring states in eastern and southeastern California are requesting Newsom to reconsider this legislation. Lombardo and Hobbs suggested that California’s regulation and inventory requirements for refineries could lead to supply shortages, resulting in consumers in Nevada and Arizona paying more.
In their letter, they wrote, “Given that our two states largely depend on California’s pipeline to supply fuel, these upcoming cost increases and supply shortages are of great concern to Arizona and Nevada.” “What concerns us even more is that refineries have warned that the statutory inventory requirements for refineries may lead to supply shortages and potential refinery shutdowns, which would have a severe impact on our entire western region’s economy and transportation infrastructure.”
Additionally, the two governors also mentioned a recent report released by the California Energy Commission, which highlighted potential drawbacks including the cost of maintaining additional storage and risks of price spikes. The report stated that if refineries withhold inventory to maintain the mandated minimum inventory, this could artificially create shortages in the downstream market—both governors expressed, “This conclusion is disturbing, and before this legislation progresses, bipartisan regional communication is necessary.”
In the press release on September 10, Nevada Governor stated that achieving lower fuel prices is a common goal and pledged to resist California’s agenda. Arizona Governor called on leaders in the southwest region to take more action to address inflation pressures. “Arizonans are struggling with high living costs, and we cannot afford another price hike.”
California Republican legislators also sent a letter to Newsom on August 29 expressing concerns about the regulation of refinery inventory plans. The letter requested clarification on the impact of the bill on retail fuel prices and Newsom’s plans to alleviate fuel shortages. The letter also stated that the proposed bill “does nothing to address the ongoing issue of California’s oil prices persisting above the national average.”
As of the time of publication, Newsom had not responded to requests for comment from The Epoch Times.