BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1962
                                                                  Page  1

          Date of Hearing:   July 6, 2000

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE 
                               Roderick Wright, Chair
                     SB 1962 (Costa) - As Amended:  June 29, 2000

           SENATE VOTE:   39-0
           
          SUBJECT  :  Petroleum products: reports.

           SUMMARY  :   Requires oil refiners and marketers to report  
          additional specific information to the California Energy  
          Commission (CEC).  Specifically,  this bill  :  

          1)Defines unbranded fuel as gasoline and diesel fuel sold for  
            wholesale or retail distribution to consumers without  
            proprietary additives or marketing under an independent  
            refiner or integrated refining and marketing company brand  
            name or trademark.

          1)Requires refiners to report monthly to CEC on imports and  
            sources of finished petroleum products and blendstocks,  
            exports and destinations of finished petroleum products and  
            blendstocks, and all unbranded gasoline sold by the refiner,  
            blender, or importer.

          1)Requires major marketers to additionally report monthly to CEC  
            on sources of petroleum product receipts, inventories of  
            finished petroleum products and blendstocks by type,  
            distributions through branded and unbranded distribution  
            networks, and exports of finished petroleum products and  
            blendstocks, by type, from the state.

          1)Requires CEC staff to include sales to unbranded retail  
            markets as part of their analysis of prices of petroleum  
            products.

          1)Extends CEC and staff prohibitions regarding use of reported  
            information on petroleum products and blendstocks for any  
            other purposes except statistical purposes, publication of  
            information on petroleum products and blendstocks whereby the  
            reporting establishment or individual can be identified, and  
            permitting anyone other than CEC members and staff to examine  
            the reports providing the information on petroleum products  
            and blendstocks;








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          1)Makes additional findings and declarations relative to  
            information and data on production and supplies of branded and  
            unbranded gasoline, diesel fuel and other distillates,  
            supplies of blendstocks used in the manufacturing of gasoline,  
            exports of finished gasoline, diesel fuel, and other refined  
            products, and exports of finished gasoline, diesel fuel, and  
            blendstocks.

           EXISTING LAW:  

          1)Requires petroleum product refiners to submit monthly  
            information to CEC, including information on feedstock inputs,  
            origin of petroleum receipts, refinery outputs, refinery  
            stocks, and finished product supply and distribution. 

          1)Defines major marketer as any person who sells natural gas or  
            oil in amounts determined by CEC as having a major effect on  
            energy supplies.

          1)Requires major marketers of petroleum products to provide  
            information to CEC on petroleum and petroleum product  
            receipts, inventories, and distributions.  

          1)Requires CEC to gather, analyze, and interpret information  
            submitted to it concerning motor fuel prices and any  
            significant changes in prices charged by the petroleum  
            industry for petroleum or petroleum products sold in  
            California and the reasons for those changes.

          1)Makes information provided to CEC by petroleum product  
            refiners and major marketers confidential and subject to  
            disclosure and release only under certain circumstances.

           FISCAL EFFECT  :  Unknown.

           COMMENTS  :   

          1)The author has introduced this bill to give CEC the authority  
            to track the production, sale, and distribution of unbranded  
            fuel, along with imports and exports of all gasoline, diesel  
            fuel, and blended fuel stocks.  This additional information  
            will assist CEC in monitoring the production and supplies of  
            these fuels, as well as developing contingency plans to ensure  
            sufficient supplies of fuels are available for necessary  








                                                                  SB 1962
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            services. 

          1)Police and fire departments, government agencies, farmers, and  
            small businesses are the primary consumers of unbranded fuel.   
            According to the sponsor, recent shortages in the supply of  
            unbranded fuels have driven prices beyond those of branded  
            fuels (fuels sold for wholesale or retail distribution  
            containing proprietary additives and marketed under a  
            marketing company brand name or trademark).  The price  
            increases caused financial problems for these consumers  
            because they cannot cut back on the amounts of fuel they use  
            to deliver services or readily switch to alternative sources. 

          1)Existing law gives CEC authority to track price and supply  
            information on branded gasoline and diesel fuel in California.  
             CEC uses the data to produce reports and analysis on market  
            structures, trends, demand forecasts, and makes  
            recommendations on policy issues.  Refiners and marketers are  
            required to report this information to CEC on a periodic  
            basis.  Additionally, CEC is required to use this information  
            to develop a contingency plan every five years in the case of  
            energy shortages that pose a threat to public health or  
            safety.  This plan includes the Emergency Fuel Allocation  
            Program.  During a prolonged and widespread shortage, the  
            Governor may proclaim a state of emergency and order CEC to  
            implement a fuel set-aside program to ensure enough fuel is  
            available to continue necessary public services.  The sponsor  
            argues the additional data this bill provides will give CEC a  
            more complete picture of available fuel supplies in the state  
            and the ability to plan better for contingencies.

          1)An additional measure related to fuel supplies is SB 123  
            (Peace), which permits a branded gasoline franchise to  
            purchase the branded petroleum product from any location in  
            the franchiser's network.  The object of that bill was to  
            address the increase in fuel prices by requiring refiners to  
            charge a uniform price to dealers supplied from each of the  
            refiners terminals.  According to the Assembly Utilities and  
            Commerce Committee analysis, implementation of those  
            provisions could actually result in higher prices caused by a  
            lack of predictability in the gasoline market.  This bill, by  
            contrast, addresses the issue of high fuel prices by  
            increasing the universe of data available on fuel prices and  
            supplies.









                                                                  SB 1962
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           REGISTERED SUPPORT / OPPOSITION  :

           Support  

          California Independent Oil Marketers Association (sponsor)

           Opposition  

          None on file.
           

          Analysis Prepared by  :    Jonathan Buttle / U. & C. / (916)  
          319-2083