Newsom Wants to Work with Refiners to Keep a Lid on California Gas Prices

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(Bloomberg) — Governor Gavin Newsom is urging California’s energy commission to work with the oil industry on maintaining fuel supply and refining in the state, less than a week after Valero Energy Corp. said it is planning to close its San Francisco Bay area refinery.

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Newsom directed Siva Gunda, vice chair of the California Energy Commission, to work closely with refiners, including through “high-level, immediate engagement,” to ensure affordable and reliable supply, according to a letter seen by Bloomberg News. He asked that Gunda reinforce the state’s “openness to a collaborative relationship.” 

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A Newsom spokesman confirmed the contents of the letter and declined to comment further.

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Californians pay the highest gasoline prices in the US, and oil output has been plunging for most of the past four decades while shale-rich states such as Texas and New Mexico have seen crude production boom. Newsom, who has previously referred to the oil industry as the “polluted heart of this climate crisis,” has led a multiyear effort to mitigate price spikes at the pump while also promoting the transition to clean energy. 

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California has enacted legislation including bill SB X1-2, which authorized the state energy commission to determine an acceptable profit margin for in-state refiners and penalize those that exceed it. More recently, bill AB X2-1 has mandated increased reporting requirements by the state’s refiners. Those rules have been met with ire from the oil industry, which has consistently warned that the state’s fuel supply is growing unreliable.

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In the last year, Chevron Corp. has moved its headquarters to Texas, and Phillips 66 announced the closure of its Los Angeles refinery. Last week, Valero announced plans to idle, repurpose or cease operations at its 145,000 barrel-a-day Benicia refinery near San Francisco by the end of April 2026. With the shifts, California will see almost one-fifth of its crude-processing capacity vanish in the next 12 months.

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Newsom said in the letter, dated April 21, that his office holds a “firm belief that Californians can be protected from price spikes and refiners can profitably operate in California.” He gave the energy commission a July 1 deadline to recommend any changes in the state’s approach to fuel supply and to work closely with the cross-agency Petroleum Strategy Task Force.

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“California will continue to lead the way in this transition, but it’s imperative that we continue to ensure a safe, affordable and reliable supply of transportation fuels over the next two decades,” he wrote. 

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—With assistance from Eliyahu Kamisher.

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