BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1962 - Costa Hearing
Date: April 25, 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 being annoying and disruptive, don't
qualify as an emergency under the law.
KEY QUESTIONS
1.Should oil refiners and major marketers be required to
report more specific data to the CEC in the manner
proposed by this bill?
2.Do the amendments to the intent section of the
Warren-Alquist State Energy Resources and Development Act
proposed by this bill conflict with the intent section as
a whole?
COMMENTS
1) A More Complete Picture . 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) Price 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) Overdependence vs. Adequate Supply . The bill adds
language to the intent section of the Warren-Alquist
State Energy Resources and Development Act 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, but even if individual consumers were to be
added, the author and Committee may wish to consider
whether this portion of the bill actually conflicts with
existing state law as it pertains to the state's energy
policy.
That's because Public Resources Code 25000.5(a) states
that an overdependence on petroleum-based fuels as an
energy resource is a threat to the energy security of the
state and that petroleum use as an energy resource
contributes substantially to a number of public health
problems.
Public Resources Code 25000.5(b), which this bill
proposes to amend, states it's the policy of the state to
establish a state transportation energy policy that
results in the least environmental and economic cost to
the state. The author and Committee may wish to consider
whether adding language to this section, as this bill
proposes to do, stating it's the policy of the state to
ensure an adequate and economic supply of fuel runs
counter to the intent of PRC 25000.5 as a whole.
POSITIONS
SPONSOR:
California Independent Oil Marketers Association
SUPPORT:
None on file
OPPOSE:
None on file
Randy Chinn
SB 1962 Analysis
Hearing Date: April 25, 2000