CA Senate panel OKs cap on refiner profits: Correction

Corrects story to explain vote was by a Senate committee

A California Senate committee today passed a bill that would set a maximum gross gasoline refining margin for in-state refiners, in a bid to combat what governor Gavin Newsom's (D) office views as price gouging by oil companies.

The Senate Energy, Utilities and Communications Committee approved a bill that would authorize the California Energy Commission (CEC) to establish a maximum gross gasoline refining margin in California and issue penalties to companies that exceed it.

Existing law requires California refiners to submit gasoline production information to the commission 30 calendar days after month-end, including gross gasoline refining margins. Today's bill requires refiners to also report the net gasoline refining margin per barrel — the gross margin minus the refiners' operational costs, such as labor, electricity and natural gas. It also establishes a Division of Petroleum Market Oversight within the CEC to gather refining margin data, set a maximum refining margin and refer what it deems to be violations of the margin to the California attorney general for prosecution.

The bill is a "transparency measure," bill sponsor senator Nancy Skinner said at today's Senate hearing. Increased transparency measures could alter in-state refiners' economics without the need for penalties on maximum margins, Skinner noted.

Industry groups and refiners argue that the bill will discourage investment, limit product supply and ultimately cost Californians more to fill their tanks. They also opposed the legislature's "rushed approach," Western States Petroleum Association (WSPA) lobbyist Eloy Garcia said today, speaking in opposition to the bill.

"Refiners do leave this state," Garcia said, and later clarified during questioning that more could leave should regulatory oversight tighten. "We urge you to take more time."

Chevron called the bill "irresponsible" and said it "requires fundamental review and revision during the legislative process."

Refiners Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero produce 98pc of the gasoline in California according to California Energy Commission data.

By Nathan Risser