BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1962 - Costa Hearing
Date: April 11, 2000 S
As Introduced: February 25, 2000 FISCAL B
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DESCRIPTION
Current law requires oil refiners to report specified
information regarding their refinery inputs and outputs to
the California Energy Commission (CEC).
Current law requires major marketers, as defined, to report
on their petroleum product receipts, inventories, and
distributions to the CEC.
Current law requires the CEC to analyze that information
with regard to the nature of any fuel shortages and price
changes.
This bill requires refiners and major marketers to report
more specific data to the CEC, including imports and
exports of finished petroleum products, the destination of
their exports, and sales of unbranded gasoline.
BACKGROUND
The sponsor of this bill, the California Independent Oil
Marketers Association (CIOMA), believes that while the CEC
tracks branded gasoline prices and supplies, it doesn't
have the authority to track supplies and distribution of
unbranded gasoline. The CEC also has no authority to track
imports of gasoline and diesel fuel, nor can it require
refiners to disclose how much gasoline, diesel fuel, or
blend stocks they are shipping out of state.
Current law charges the CEC with preparing a plan
specifying actions to be taken in the event of an impending
serious shortage of energy and with developing contingency
plans to deal with possible shortages of fuel supplies to
protect public health, safety, and welfare. In an
emergency the CEC, pursuant to an executive order, can
order that fuel be made available to relieve a shortage.
For example, if there were a shortage of diesel fuel in the
Fresno area and such shortage meant that farmers could not
operate the necessary equipment to get their product to
market, the CEC could order one or more wholesalers of
diesel fuel to make supplies available in Fresno. High
fuel prices, while constituting an inconvenience, don't
qualify as an emergency under the law.
COMMENTS
1. Fill 'er Up . The author believes giving the CEC the
authority to track unbranded gasoline supplies, imports,
and exports is critical to helping the CEC develop a full,
complete, and effective contingency plan to ensure
sufficient supplies of gasoline and diesel are available in
an emergency.
2. Those Aren't Baseball Spikes . California's experience
over the last several years shows that any disruption in
refinery operations has a tendency to cause gasoline prices
to spike. While some argue that the spikes are driven by
the inability of refiners to build new production
facilities and the inability to sell "non-California" gas
in the state, the reality is California motorists are
competing for gasoline with motorists in Nevada and Arizona
because gasoline produced by California refineries is
regularly sent to those states. During periods when the
supply is adequate, that's a non-issue, but when shortages
develop, those exports probably exacerbate the shortage and
help drive up prices. This bill permits the CEC to track
how much California-produced gasoline is exported to other
states in an effort to give it a more complete picture of
how the state's gasoline market functions in the "real
world."
3. One, Two, Three . . . Okay, Who's Missing? The bill
adds intent language stating it's the policy of the state
to ensure that emergency service agencies, state and local
government agencies, agricultural consumers, and business
consumers of petroleum products have adequate and economic
supplies of fuel. Left out of this intent language are
individual consumers. As such, the author and Committee
may wish to consider simply striking this language (Page 2,
Line 27 through Page 3, Line 2) and replacing it with
language that reads:
"It is also the policy of the state to ensure that all
consumers have access to adequate and economic
supplies of fuel."
However, the author and Committee may also wish to consider
simply striking the amendments to this intent section of
law entirely. That's because the notion of ensuring that
"adequate and economic supplies" of fuel are available
appears to conflict with the intent of the section as a
whole, which is designed to promote cost-effective energy
efficiency policies.
POSITIONS
Sponsor:
California Independent Oil Marketers Association
Support:
None on file
Oppose:
None on file
Randy Chinn
SB 1962 Analysis
Hearing Date: April 11, 2000