California Governor Gavin Newsom has directed state officials to step up efforts to guarantee reliable fuel supplies for the nation’s biggest auto market, prompting oil companies to blame state policies for difficult business conditions and high pump prices.
Newsom’s letter to California Energy Commission Vice Chair Siva Gunda, dated April 21 and seen by Reuters on Wednesday, came days after Valero Energy said it would permanently shut or restructure its refinery in Benicia, California by the end of April 2026. The Benicia refinery accounts for about 9% of the state’s crude oil refining capacity.
“I write to direct you to redouble the State’s efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels,” Newsom wrote. He added that although gasoline demand in the state was in a gradual decline, it would exist for years to come.
The governor set a July 1 deadline for the CEC to recommend changes to the state’s approach to managing fuel supplies during the energy transition and asked the agency to reinforce the state’s belief that refiners can operate profitably.
Refiners have said they face growing regulatory and cost pressures in California, which has among the most aggressive climate change policies of any U.S. state and has a goal to ban new gasoline-powered cars starting in 2035.
Gasoline prices in California are among the highest in the United States due to the state’s reliance on imports from Latin America and the Middle East to offset declining state supplies.
In his letter, Newsom said the Trump administration was to blame for economic instability and market turmoil that was harming oil companies.
A refining trade group said that assertion was false, and instead blamed California.
“Governor Newsom’s letter to the California Energy Commission directing it to ‘redouble’ its efforts to work closely with refiners so ‘they see the value in serving the California market’ is laughable and a blatant effort to cover his backside,” Chet Thompson, CEO of the American Fuel & Petrochemical Manufacturers, said in an emailed statement. “State policies, not the new administration in Washington, are why fuel manufacturers struggle to operate in California and why California drivers face the highest fuel prices in the country.”
(Reporting by Nichola Groom Editing by Marguerita Choy)