California governor Gavin Newsom (D) on Monday signed AB X2-1 into law, authorizing the state's energy regulator to require refiners to maintain minimum gasoline inventories.
The bill is the latest in a multi-year legislative effort by Newsom to mitigate price spikes at the pump and authorizes the California Energy Commission (CEC) to regulate, develop and impose requirements for in-state refiners to maintain minimum stocks of gasoline and gasoline blending components.
The CEC would have the authority to penalize refiners who fail to comply.
A minimum road fuels inventory requirement is unprecedented in the US but has been implemented in various forms in Australia, New Zealand, the Philippines and Mexico.
While the bill was signed into law Monday, no mandate on refiners is imminent as the CEC will now begin the process of assessing how to structure and implement a minimum reserve rule.
Industry group Western States Petroleum Association (WSPA) that has long opposed Newsom's regulation of the oil and gas industry called AB X2-1 a "smokescreen" for impending higher gasoline taxes in California and have previously deemed the minimum stock requirement a misdiagnosis of a broader problem.
"You couldn't pay me enough to regurgitate the talking points of WSPA," Newsom said in a press conference today and referred to the industry group and the oil industry at large as the "polluted heart of the climate crisis".
