BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1340 - Kehoe Hearing Date:
June 24, 2003 A
As Amended: June 17, 2003 FISCAL B
1
3
4
0
DESCRIPTION
Current law requires oil producers, refiners, pipeline
operators, transporters, storage facilities and marketers, to
submit monthly information on petroleum supplies to the
California Energy Commission (CEC).
Under current regulations , the CEC requires those entities noted
above to provide information including:
Receipts and inventory levels of crude oil and petroleum
products at each refinery and terminal location.
The amount of gasoline, diesel, jet fuel, blending components,
and other petroleum products imported and exported.
The amount of gasoline, diesel, jet fuel, blending components,
and other petroleum products transported intrastate by marine
vessel.
The amount of crude oil imported, including information
identifying the source of the crude oil.
Dealer tank wagon prices, also called net dealer buying
prices.
This bill statutorily requires those same entities to submit the
information noted above on a weekly instead of a monthly basis.
BACKGROUND
While being home to a number of oil refineries, California is
also home to high gasoline prices. In 1996, California
gasoline prices spiked from $1.15/gal to $1.47/gal. In 1999,
gasoline prices spiked again, rising as much as $0.50/gal higher
than the rest of the nation. In March 2003, gas prices jumped
from $1.57/gal to $2.15/gal. Each of these price spikes
prompted public outcries, legislative responses, and, in 1999,
an investigation by the Attorney General.
The concerns over gasoline prices prompted the Governor to order
an investigation by the California Energy Commission (CEC).
That investigation noted gasoline prices climbed 36% from the
beginning of the year through March 17. The cause of the price
increases was attributed to large increases in the price of oil
due to uncertainty about the U.S.-Iraq war, an oil strike in
Venezuela, and a cold winter in the eastern U.S. Refiners also
switched from a winter gas formula to a summer formula, which is
typically more expensive to produce and, during the switchover,
temporarily tightens supplies. Additional gasoline demand in
Phoenix reduced California supplies further, as did the move to
phase-out the use of MTBE.
While prices are lower than they were in March, there are now
new reports that refinery production problems have caused
wholesale prices to jump about 30 cents a gallon since early
June, and the effects are already starting to be felt at the
pump. On June 18, the Sacramento Bee reported retail prices in
San Francisco and Santa Barbara rose three cents to average
$1.90/gal, in Los Angeles and Sacramento prices rose 4 cents to
$1.78/gal and $1.80/gal, respectively, and in Chico prices rose
eight cents to $1.81/gal.
Attorney General Report
In 1999, the Attorney General opened an investigation into the
activities of the refiners to determine whether they were
operating in a non-competitive manner in violation of California
and/or federal law. This investigation is ongoing, but has yet
to result in any prosecutions.
The Attorney General also convened a Task Force on gasoline
pricing. A summary of the Task Force discussion was published
in May 2000 in a report entitled "Report on Gasoline Pricing in
California." A preliminary report provided to the Attorney
General noted three contributing factors to California's
relatively high gas prices:
A relative lack of competition in California's gasoline
refining and marketing industry;
Supply constraints related to California's unique cleaner
burning gasoline requirement;
Somewhat higher state taxes.
In a recent update, the Attorney General suggested considering
the following proposals:
Creating a strategic fuel reserve;
Increasing fuel economy standards and encouraging non-gasoline
based technology;
Enabling gas dealers to shop for the best wholesale prices;
Examining ways to import more fuel into the state.
COMMENTS
1.An Apple A Week . . . . In its March 28, 2003, report on
gasoline and diesel price spikes, the CEC concluded it needs
the information it's now getting on a monthly basis on a
weekly basis instead. It believes the information is
necessary to more accurately track inventories, imports, and
exports - all of which will help the CEC more precisely
determine the causes of price spikes. The CEC recommended
that the petroleum industry change its current practice of
submitting information on a monthly basis and begin
voluntarily submitting reports to the CEC weekly. This bill
turns that recommendation into a requirement.
2.The CEC May Be On The Case . The CEC is currently conducting
regulatory proceedings to modify reporting requirements for
the petroleum industry and is considering requiring weekly
reporting from the industry as part of those proceedings.
ASSEMBLY VOTES
Assembly Floor (74-0)
Assembly Appropriations Committee (24-0)
Assembly Utilities and Commerce Committee
(11-0)
POSITIONS
Sponsor:
Author
Support:
California Service Station and Automotive Repair Association
Utility Consumers' Action Network
Oppose:
None on file
Jennie Bretschneider
AB 1340 Analysis
Hearing Date: June 24, 2003