Bipartisan letter from Arizona and Nevada governors warns of potential gasoline supply shortages and price increases due to California governor Gavin Newsom’s proposal to build a gasoline refinery. The governors of both states are Democrats.
“It is evident that increased regulatory burdens on refiners and forced supply shortages will result in higher costs for consumers in all of our states,” said Arizona Gov. Katie Hobbs and Nevada Gov. Joe Lombardo in their letter to Newsom. “These impending price hikes and supply shortages are of tremendous concern to Arizona and Nevada, as our states rely on California pipelines for a substantial portion of our fuel.”
Chevron, which runs most of California’s declining refinery capacity, estimates that constructing one storage tank in the state would cost $35 million and take ten years, with the expense of construction, filling, and maintenance ultimately being passed on to consumers. This is in response to Newsom’s proposal, which would mandate that refineries construct massive storage tanks to accommodate more output than the two weeks currently needed.
“May artificially create shortages in downstream markets,” Hobbs and Lombardo said, citing a determination by Newsom’s own California Energy Commission. This, they added, would “raise costs for consumers in Arizona and Nevada.”
Despite Newsom’s public accusations of “greed” and “price gouging” directed at gas refiners, an appointee of his who works for the CEC has stated that boosting gasoline supplies is crucial to avoiding price increases for customers in the event that one of the state’s few refineries goes down. With a ban on selling new gasoline-powered passenger vehicles beginning in 2035 and a subsequent decline in the number of refineries in the state, energy companies are hesitant to invest billions of dollars in new facilities that would quickly become unprofitable.
With the nation’s highest gas taxes and pricing, Californians pay an extra $1.62 a gallon on top of what they pay at the pump. According to AAA, the national average for gas is $3.25 per gallon, while the average in California is $4.75 per gallon. This means that there is a $1.50 per gallon difference between the two. The price of gasoline in California is $1.44 per gallon after federal taxes and levies, which accounts for 96% of the price difference between California and American gas, after subtracting 18 cents per gallon. Refineries in California and Washington employ their own unique blend of fuel, which drives up manufacturing costs and reduces output to a trickle.
The United States Environmental Protection Agency reversed the opt-out that the governor of Arizona had obtained in 1998 and mandated last year that gas stations in Phoenix, Arizona, supply reformulated gas with lower emissions.
By assisting in the prevention of these price surges, our proposal will save customers hundreds of millions of dollars annually. This includes consumers in Arizona and Nevada. “Now is the time to take action,” Newsom stated on X following the publication of the governors’ letter of dissent.
On September 18, 19, and 26, a special session will be convened to hear the bill’s arguments; on October 1, a vote will be taken.