Hold onto your wallets! The California Energy Commission (CEC) and the California Air Resources Board are lining up for a WWE-style cage match to control the fueling market and to destroy the existing fueling infrastructure and fueling related businesses in California.
A little background: the California State Legislature — in an unprecedented short session — passed SBX 1-2 in 2023. Called the California Gas Price Gouging and Transparency Law, California Governor Newsom demanded the bill be passed to determine if price gouging was occurring in the state.
Governor Newsom proudly signed the bill into law, insisting that he would root out the reason for high gasoline prices. This was in spite of the fact that 40-plus investigations had already occurred regarding price gouging since 1990 — and no price gouging was ever identified.
This was a great election year move by the Governor. But when you read everything included in the law, it smells a lot worse than the food served to him at the French Laundry during COVID.
SBX 1-2 will astound all who find out what this law does. All concerns and development of this rule are given "emergency" status. This means the bill empowered the CEC to make up its own rules without legislative oversight. It has allowed the agency to develop a narrative that the fueling industry is stealing from California consumers.
No other bill ever passed in California has had this kind of status.
The law authorizes the California Energy Commission to set a maximum gross gasoline refining margin and a penalty for refiners that exceed it. This means the agency can institute state control over gasoline prices.
It establishes a new data collection authority and creates an another government division — Division of Petroleum Marketing Oversight — to monitor petroleum markets and flag potential market manipulation. This division will monitor transportation fuel demand and lead the "discussion of methods to ensure an adequate, affordable, and reliable fuel supply as the state transitions away from petroleum fuels."
But wait, there's more.
The CEC is exempt from using the competitive bid process for consultants.
The CEC has exempted itself from California Environmental Quality Act analysis, mandated for every government action since it was signed into law in 1970.
Since absolute power has been granted by this bill it is expected that the next round of rulemaking by the CEC will include refinery maintenance rules to better control the market.
Currently, CEC workshops have been delayed regarding this matter. But watch out for the future where once again business input will be requested but likely ignored.
In 1982, California had 43 refineries. That number has dwindled to less than 15 today. Doing business in California is difficult and fraught with layered regulations.
Any changes in refining rules or fueling delivery will only make a very sensitive fueling market worse. Potentially this new rule may result in liquid fuel storages and the shutdown of refineries that are less profitable.
And this is all during a time when the electrification of transportation system in California is failing.
The results of all of this are not going to be lower prices for liquid fuel but rather a significant increase for consumers — and commercial transportation users. Expect to see this state-directed nightmare to begin to increase fuel pricing by the end of the year.
Happy Halloween! The monsters are winning.
Originally published in the October 2024 issue of the
O&A Marketing News.
© KAL Publications Inc. 2024