California’s New Law Aims to Curb Gas Price Surges, Threatening Arizona’s Rates

SACRAMENTO, Calif.—The California State Assembly has passed a bill aimed at curbing gas price volatility, moving forward to Governor Gavin Newsom’s desk for final approval. The legislation, known as ABX2-1, received a 41-16 vote Monday, after previously gaining approval from the State Senate.

This initiative mandates that oil refineries hold a minimum inventory to help control price surges during peak driving periods, while also requiring monitoring during maintenance activities—both planned and unplanned.

Governor Newsom expressed optimism surrounding the bill, stating it brings Californians closer to protection against significant price hikes attributed to “Big Oil.” Last year alone, these price spikes cost consumers over $2 billion, a figure Newsom wants to reduce significantly.

Data from the American Automobile Association (AAA) shows California residents are already paying an average of $4.66 per gallon, significantly higher than the national average by more than a dollar. The legislation draws upon findings from the state’s Division of Petroleum Market Oversight, linking price spikes primarily to global crude oil fluctuations and unanticipated refinery shutdowns.

Senate President pro tem Mike McGuire emphasized the bill’s importance for budgeting families across California, remarking that rising gas prices touch nearly all aspects of daily life, highlighting the need for preventive measures.

The bill’s passage did not come without dissent. State Senator Dave Min, who abstained from voting, noted that more thorough discussions are essential to ensure the intended goals are achieved in lowering gas prices for residents.

However, major oil companies like Chevron have criticized the bill, claiming it could exacerbate prices for California and neighboring states like Arizona and Nevada. Chevron voiced disappointment over the lack of industry engagement in the legislative process, suggesting the bill could harm the safety and reliability of California’s refineries.

In contrast, Senate Republicans attempted to introduce a measure aimed at suspending the state’s gas tax to provide immediate relief for families, but this proposal did not come up for a vote during the special session.

The Western States Petroleum Association has characterized the bill as an attempt to manipulate prices to discourage driving, indicating potential long-term impacts on California’s energy landscape.

Governors of Nevada and Arizona have also expressed concerns, urging Governor Newsom to reconsider the bill due to its possible adverse effects on gas prices in their states. The discussion continues as ABX2-1 returns to the Assembly for a final vote on October 14.