SACRAMENTO, Calif. — The governors of Arizona and Nevada urged California Gov. Gavin Newsom in a letter Tuesday not to rush to impose new storage requirements on California oil refineries, citing concerns that the requirements could increase costs in their states.
The letter from Nevada Gov. Joe Lombardo, a Republican, and Arizona Gov. Katie Hobbs, a Democrat, came in response to an Assembly proposal backed by Newsom that would give the California Energy Commission the authority to require refiners to store more gas to prevent price increases from shortages.
Newsom called a special session of the Legislature on Aug. 31 to consider the proposal after the Legislature declined to pass the proposal in the final days of the regular session.
The letter highlights the political stakes of Newsom’s effort to address rising gas prices over the past two years, amid a presidential election in which California’s high gas prices could be used as an attack line against Democrats in the state.
The governors of neighboring states, which get a significant portion of their gas from California refineries, said they were concerned that “mandating refinery stockpiles would directly increase fuel costs for all of our constituents and create further economic instability in the region.”
They cited refiners’ concerns that the requirements could cause shortages by keeping supply off the market to preserve reserves. They also cited a letter from the California Energy Commission that said a supply requirement carried the potential for shortages.
“The people of Nevada and Arizona should not have to foot the bill for California’s misguided policies,” Lombardo said on X.
“Arizona residents are struggling due to the high cost of living and we cannot afford another price increase,” Hobbs said on the site.
Newsom has been focused on gas prices since the fall of 2022, when California prices averaged $6.44 a gallon. He called a special session in December that resulted in a law directing the CEC to analyze gas prices and consider caps on refinery profits.
The agency floated the idea of new supply requirements in January this year, along with new rules for oil markets where prices are set.
Most of the California Assembly’s Democratic caucus first saw the text two weeks ago, with just days left to approve it. Moderates balked at the timetable and raised concerns about unintended consequences, leading Newsom to call another special session — an idea supported by Assembly Speaker Robert Rivas but not by Senate President Pro Tem Mike McGuire.
Nevada’s Lombardo raised concerns about the CEC’s potential regulation in May, prompting a sharp response from Newsom, whose spokesman called it a “stunt” to appease “Big Oil donors.”
A Democratic governor’s concerns in Hobbs could be more complicated for Newsom to address. The governor’s office did not immediately respond to a request for comment.
The first hearing of the special session is scheduled for September 18.
