With election season in full swing, California Governor Gavin Newsom officially called a special session to push new mandates on refiners over the weekend, threatening to send gas prices higher across the Western United States. The State Assembly is reportedly set to hold hearings on the measure in the coming weeks, while in a historic first the California Senate stated they will refuse the governor’s call to convene for a special session, setting up a potential dramatic showdown between Newsom and members of his own party.
The governor’s proposed legislation, which mandates minimum fuel reserves and imposes new restrictions on refinery maintenance, threatens to disrupt California’s delicate energy supply chain and send prices higher in neighboring states like Nevada and Arizona. Newsom’s decision to push this legislation at the height of election season is raising eyebrows, especially considering the potential political fallout in politically crucial bordering swing states.
Impact Beyond California: Nevada and Arizona Face Price Hikes
While Newsom’s proposal will obviously impact California drivers who already pay the highest prices in the country at $4.65 a gallon, the new refiner mandates would also have massive impacts in Nevada and Arizona.
Nevada relies heavily on California gas imports, with almost 90 percent of its supply coming from several of California’s few remaining refineries. Arizona likewise receives about one third of its gasoline from the Golden State, primarily from Southern California. Any disruptions in California’s gasoline availability, such as Newsom’s new order to maintain gas reserves, would likely curtail fuel imports into Nevada and Arizona and send prices in both states higher.
Sixteen members of California’s Congressional delegation and a bevy of elected officials in Arizona and Nevada are sharply criticizing Newsom over the bill, noting the impacts could extend across the Western United States:
Gov. Newsom’s attempt to micromanage refineries in the state will be detrimental to Californians and the western United States. The analysis done by his own administration indicates this will increase gas prices and create gasoline shortages. pic.twitter.com/kM0PpfXaQp
— Vince Fong (@vfong) September 3, 2024
Special Legislative Session Adds Pressure
While the California Assembly is on board with reviewing the bill, Assembly Speaker Robert Rivas has been noncommittal about whether the Assembly will ultimately advance Newsom’s legislation as written. Rivas said in a statement last week:
“What I’m not going to do is push through bills that haven’t been sufficiently vetted with public hearings.”
Newsom’s refinery bill did not go through the typical committee process and was only sprung on lawmakers in August, leaving little time to assess the practical impact of the proposed reforms on gas prices.
California State Senate Democrats, meanwhile, say they support Newsom’s bill but will refuse to meet for the proposed special session. The San Francisco Chronicle reports:
“When asked why, if [CA Senate Pro Tem Mike McGuire] supported passing energy affordability legislation, he didn’t want to try to take it up again during a special session he simply reiterated that his chamber had had the votes to pass the legislation in August.
“‘The Senate Democratic Caucus is 100 percent united that we’re not going to come back for a special session. Here’s why: For weeks we have had the votes. For weeks we were calling for a vote. For weeks, we had consensus within our caucus to be able to provide Californians with the relief they need immediately,’ he told reporters early Sunday morning shortly after his chamber adjourned for the year.”
The State Senate’s refusal sets up a potential legal showdown with Newsom, with the governor’s office implying over the weekend they could take the State Senate to court:
President pro tempore of the California Senate, Mike McGuire, rejected any idea that his refusal to convene under Newsom’s order is illegal, calling those suggestions from Newsom’s office “hogwash.”
McGuire and Newsom reportedly met Wednesday without reaching an agreement, but McGuire’s office said “they’ll … have more to share soon.”
Special Session Could Prove a Political Liability for VP Kamala Harris, Democrats in Competitive Races
A Politico article published prior to the special session fallout last Friday bluntly argued the California gas price dispute puts increased pressure on Vice President Kamala Harris given the expected impact to gas prices in Arizona and Nevada. The bill could also hurt fellow state Democrats in tight races, which Politico separately noted in follow-up coverage this week:
“Calling lawmakers back to Sacramento during peak campaign season could hurt those in tight races, and drawing continued attention to high gas prices could also prove to be a liability for Democrats.”
Newsom’s refinery bill could further strain this dynamic and force Harris to navigate the fallout of her home state’s energy policies. The Western States Petroleum Association’s Kevin Slagle told Politico last week Newsom’s special session will have significant national implications:
“Because of the state of the presidential race, because of the very visible presence Newsom had on the national stage, it’s inevitable California policies will be discussed at the national level. Our intent is to try to stop bad policy in California, but it would not be surprising if it became part of the national discussion.”
Newsom’s apparent indifference to Democrats’ national political consequences in neighboring must-win states is all the more curious considering recent reports of a growing rift between the California Governor and Vice President Harris.
As Politico pointed out last week, Newsom’s position as a national surrogate faded upon Harris taking the presidential nomination. The California Governor also appeared to sound a bitter note about the Democratic nomination process after President Biden’s withdrawal in recent comments on the podcast Pod Save America:
“We went through a very open process, a very inclusive process. It was bottom-up, I don’t know if you know that. That’s what I’ve been told to say.” (Emphasis added)
Special Session Tied to Newsom’s National Ambitions?
While this dispute is causing obvious friction among California Democrats, political experts increasingly speculate Newsom’s attempt to cram the bill through the state legislature while bypassing the usual process could be a strategic maneuver tied to his own national ambitions after his term as Governor concludes:
I mean at some point you have to wonder if Newsom is flaring a gas price debate in CA, NV and AZ just to screw with Harris. https://t.co/6UAG56XaXu
— Rob Stutzman
(@RobStutzman) September 4, 2024
Given Newsom’s fixation on “[preventing] price spikes next year and beyond,” the Los Angeles Times speculated that the Governor is hoping to minimize the odds of gas price spikes through 2026, when he terms out of office. Even the Times, however, was skeptical that a gas storage proposal would do the trick, writing:
“The industry may be wondering why it should make big capital investments in a state that, for good reason or not, wants to eventually put it out of business. If the expense falls on the refineries, simple economics says the cost will be passed on to consumers.
“[…] But if enough’s been stored to prevent price spikes, average prices would still rise, to pay for the reserve.”
BOTTOM LINE: California’s misguided energy policies will remain front and center all the way through election day. The Governor’s actions also raise questions about his long-term political ambitions, as the consequences of this legislation play out against the backdrop of what could be an incredibly tight presidential race.
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