AB 1 X2
Page 1
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
AB 1 X2 (Hart, et al.)
As Amended October 8, 2024
Majority vote
SUMMARY
Authorizes the California Energy Commission (CEC) to increase transportation fuel supply
through various actions; including, by authorizing the CEC to develop requirements on refiners
to maintain resupply plans to cover production loss during maintenance events, and to maintain
minimum levels of inventories
Senate Amendments
1) Clarify that the CEC regulations governing both the timing of turnaround and maintenance
and those adopted to maintain minimum inventories shall protect the health and safety of
employees, local communities, and the public.
2) Clarify that certain requirements of existing law shall not be modified by CEC regulations,
including employee stop-work authority or an employer's compliance with skilled and trained
workforce and wage requirements.
3) Specify that the CEC shall establish, if they develop regulations imposing minimum
inventories on refiners, a process for waiving those requirements only for a small refinery, as
defined, and only if the small refinery demonstrates a disproportionate economic hardship.
4) Clarify that the CEC may consider the use of a compliance mechanism for refiners to meet
minimum inventory requirements that is "tradable between or within each refining region."
The previous version of this bill included consideration of a "market-based compliance
mechanism."
5) Require that the labor appointee to the existing Independent Consumer Fuels Advisory
Committee must have experience in refinery operations.
COMMENTS
Gasoline prices at Californian pumps have been increasing over time and showing concerning
volatility month-to-month, significantly impacting the budgets of Californians. In the last two
years – 2022 and 2023 – California had two gasoline price spikes in September and October.
These prices were historic for California, topping near or above $6 per gallon for regular grade
retail gasoline. The price spikes were not seen in regions outside the West Coast. Higher prices
of gasoline can have crippling effects for residents on fixed or limited incomes, especially those
who rely on long commutes to get to work. Higher gasoline prices also take a toll on the overall
economy, impacting goods that use gasoline fuels to get to market. According to analysis by the
Division of Petroleum Market Oversight (DPMO), the price spike of fall 2023 cost Californians
up to $2.2 billion.
California is in a period of transition in its petroleum market. Supply is tightening, as demand is
declining. These trends are unlikely to subside. Rather, more volatility – not less – is likely if the
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state does not strategize and appropriately plan for smoothing the transition. During an oversight
hearing of the Assembly Committee on Utilities and Energy in May 2024, the CEC presented
findings from their work authorized under SBX1-2 (Skinner, Chapter 1, Statutes of 2023).
Included in that presentation were data comparing impacts on spot market prices against days of
supply for 2022 and 2023. The CEC's chart showed (in both years) that when petroleum
inventories dipped below "15 days of supply," gasoline prices began to increase. The
recommendation at the time to address this observed behavior was to collaborate with industry
on solutions to encourage them to "voluntarily" increase supplies and supplement stocks.
It is unclear the status of those voluntary efforts. Nevertheless, this bill provides the CEC the
expressed authority to impose requirements on Californian refiners to not only maintain resupply
plans to cover production loss during planned maintenance events, but to also establish minimum
inventory requirements of refined fuels on refiners. Such supply obligations are suggested by the
author and the administration (as sponsor) as being necessary tools the CEC needs to blunt the
price spikes of recent years. The administration points to two recent examples where planned
maintenance led to loss of gasoline supply in the state, with resultant increases to prices at the
pump. However, what these new tools will actually look like in practice, and the potential
realized savings from this proposal are topics of ongoing dispute.
For more information on California's oil and gasoline market, recent price fluctuations, and
supply impacts see the background documents prepared for the informational hearings by the
Petroleum and Gasoline Supply Committee during the Second Extraordinary Session on
September 18 and 19, 2024.
According to the Author
According to the author, "Governor Newsom called for this second extraordinary session to
address one goal—reduce gasoline prices for Californians. This effort builds on the foundation
laid by last year's special session legislation, SBX1-2 (Skinner), which established the Division
of Petroleum Market Oversight (DPMO). Since SBX1-2's passage, the California Energy
Commission (CEC) has gained critical insights into refiner storage capacity and operations. In
September 2023, gasoline prices in California soared to more than $6.00 per gallon. With
enhanced data and oversight, the CEC and DPMO have identified clear trends in price spikes.
ABX2-1 aims to protect consumers from surging gas prices by giving the CEC the authority to
assess whether implementing minimum inventory requirements and resupply plans can lower
average retail fuel prices, boost supply, and reduce market volatility. This common-sense
legislation will require oil companies to better plan for refinery shutdowns and supply chain
disruptions, ultimately saving Californians billions at the pump."
Arguments in Support
This bill is supported by a coalition of environmental and environmental justice organizations,
consumer groups, board of supervisors, labor organizations, equity groups, the Los Angeles
Cleantech Incubator, and the State Attorney General (AG), as cosponsor. The Service Employees
International Union California State Council (SEIU) notes the bill includes "important steps to
curb the profit seeking strategies by oil companies." The AG notes this bill imposes requirements
"to prevent supply disruptions from maintenance that leads to unnecessary price spikes."
Arguments in Opposition
This bill is opposed by a coalition of labor organizations, petroleum industry association groups,
convenience store representatives, chambers of commerce and economic partnerships, and
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various city and county governments. The State Building and Construction Trades Council of
California writes, "This bill will inadvertently put our members who work inside the fence line
of the refineries in danger by dictating when refiners can perform mandated turnaround and
maintenance work on their infrastructure."
FISCAL COMMENTS
According to the Senate Committee on Appropriations, this bill is likely to result in unknown,
potentially significant costs to the CEC to implement; however the Committee does note the
CEC estimates that its costs in the near-term "would be absorbable within existing resources."
The Committee goes on to note the CEC receives roughly $6 million in ongoing funding to
support the implementation of SBX1-2, all through the ERPA account. The ERPA account is
funded by a statutory surcharge on electricity consumption, and is in a structural deficit. As
noted in the Committee analysis, absent any changes, ERPA is projected to become insolvent in
2027-2028.
VOTES:
ASM Petroleum and Gasoline Supply: 13-2-4
YES: Petrie-Norris, Aguiar-Curry, Alvarez, Bennett, Friedman, Garcia, Hart, Jackson, Lee, Papan,
Pellerin, Wood, Zbur
NO: Jim Patterson, Joe Patterson
ABS, ABST OR NV: Flora, Gipson, Muratsuchi, Blanca Rubio
ASSEMBLY FLOOR: 44-18-17
YES: Addis, Aguiar-Curry, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Juan Carrillo,
Connolly, Mike Fong, Friedman, Gabriel, Garcia, Haney, Hart, Holden, Jackson, Jones-Sawyer, Kalra,
Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Pacheco, Papan, Pellerin, Petrie-
Norris, Ramos, Reyes, Rodriguez, Santiago, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur,
Robert Rivas
NO: Alanis, Bains, Chen, Megan Dahle, Davies, Dixon, Flora, Gallagher, Hoover, Lackey, Mathis, Jim
Patterson, Joe Patterson, Sanchez, Soria, Ta, Waldron, Wallis
ABS, ABST OR NV: Alvarez, Bryan, Calderon, Wendy Carrillo, Cervantes, Essayli, Gipson, Grayson,
Irwin, Stephanie Nguyen, Ortega, Quirk-Silva, Rendon, Luz Rivas, Blanca Rubio, Schiavo, Villapudua
SENATE FLOOR: 23-9-8
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Durazo,
Glazer, Gonzalez, Laird, Limón, McGuire, Padilla, Portantino, Skinner, Smallwood-Cuevas, Stern,
Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Grove, Hurtado, Jones, Nguyen, Niello, Ochoa Bogh, Wilk
ABS, ABST OR NV: Dodd, Eggman, Menjivar, Min, Newman, Roth, Rubio, Seyarto
UPDATED
VERSION: October 8, 2024
CONSULTANT: Laura Shybut / P. & G. S. / (916) 319-2083 FN: 0005200


Statutes affected:
ABX2 1: 25354.2 PRC, 25364 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC
09/03/24 - Introduced: 25354.2 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC
09/26/24 - Amended Assembly: 25354.2 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC
10/01/24 - Amended Assembly: 25354.2 PRC, 25364 PRC, 25364 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC, 25373 PRC, 25373 PRC
10/08/24 - Amended Senate: 25354.2 PRC, 25364 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC
10/14/24 - Enrolled: 25354.2 PRC, 25364 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC
10/14/24 - Chaptered: 25354.2 PRC, 25364 PRC, 25367 PRC, 25371 PRC, 25372.2 PRC, 25373 PRC