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Why Newsom changed his tune on Big Oil
A pumpjack in Signal Hill extracts oil from the urban oil field under the municipalities of Signal Hill and Long Beach.
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Gary Kavanagh
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Getty Images / iStockphoto
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Topline:
Gov. Gavin Newsom and state energy officials are pushing a draft bill that would boost drilling in oil-rich Kern County, a major policy pivot after the governor and Democratic lawmakers spent recent years blaming the state’s high gas prices on oil industry price gouging. The proposal comes on the heels of two announced refinery closures, which some experts estimate could drive gas prices up by as much as $1.21 per gallon by next August.
State of play: Newsom’s effort comes as the state legislature scrambles to hash out policy that could help keep the Phillips 66 refinery in Los Angeles and Valero’s refinery in the Bay Area open. The companies announced plans to shutter those facilities, which account for nearly 20% of the state’s capacity to refine gasoline, after lawmakers passed special session bills that gave state officials the power to cap refiner profit margins and require minimum fuel reserves to prevent shortages. The draft bill has sparked pushback from environmental justice groups, who’ve framed it as a handout to oil companies that would endanger public health.
Why it matters: Newsom’s shift is emblematic of a national Democratic party course correction on cost-of-living issues in the wake of the 2024 election, when President Donald Trump and Republicans notched wins on a message of affordability. It also spotlights the fact that state officials haven’t developed transition plans to keep gas prices in check and support nearby communities after refinery closures.
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Oil’s upper hand: Refiners are pushing lawmakers to further unwind policies they argue raise costs, including the state’s cap-and-trade program and rules that require oil tankers to shut down their diesel engines and run on electricity while they are docked in ports.
What’s next: Newsom and lawmakers have until Sept. 12 to pass legislation before the session ends.
Read on ... for the full story in POLITICO's California Climate newsletter.
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