Sacramento, CA – The California Fuels + Convenience Alliance (CFCA) continued to voice strong opposition to the State’s Legislative Special Session proposal to require refiners to maintain minimum inventory requirements. The proposal (previously SB 950 but now contained in ABX2-1) poses serious risks to both California's fuel market and to consumers, risks that would ultimately lead to higher prices at the pump, artificial shortages, and greater market instability.

The bill’s requirement for refiners to maintain contingency reserves could create artificial shortages by forcing refiners to withhold fuel that would otherwise meet market demand. This would likely exacerbate price volatility and supply chain disruptions. Furthermore, the bill fails to address California’s unique summer and winter gasoline blend requirements, potentially resulting in unusable reserves during periods of high demand. There is also concern that foreign entities could exploit the state's reliance on imported fuel during shortages, manipulating prices to their advantage. The burden on mid-sized businesses, which lack the resources to comply, could lead to further market consolidation and higher costs for consumers.

Equally concerning, ABX2-1 could have serious unintended consequences for unbranded gas stations that already operate on thin margins. Requiring refiners to maintain a minimum inventory would force them to withhold fuel from the market, reducing available supply during crucial times. Unbranded stations are often the last entity able to purchase gasoline from a refiner who has obligations to other purchasers. Therefore, increasing storage requirements means there are less options in the marketplace for unbranded stations to secure supply.

CFCA members, representing a diverse range of fuel suppliers statewide agree that ABX2-1 isn’t the answer:

• "Creating minimum inventory requirements will cause refiners to hold onto their supply and our purchase price to increase. This policy will also cost refiners more as they must build more storage and need to pass on the cost to consumers and not solve the problem. Ultimately, if we must purchase gas at higher prices, that means higher operational expenses for our businesses, and as a result, higher prices for consumers. We have got to decrease expenses to decrease the prices to the consumer.” – Marc Strauch, Strauch and Company
• “As a branded and unbranded wholesale fuel supplier headquartered in Modesto, California, Boyett Petroleum is already forecasting supply constraints from refiners, producers and suppliers who are actively or are considering leaving California due to the harsh regulatory environment from SBX1-2 without even the passage of ABX2-1. Adding another layer of marketplace constraints by forcing refiners to maintain a minimum inventory will take up valuable storage space resulting in the reduction of saleable inventory and the driving-up of fuel prices for Californians and neighboring consumers who rely on our state’s exports.” – Kathleen Hollowell, Boyett Petroleum
• “Two key issues stand out. First, to increase storage capacity, when will all the necessary new tankage be built, where will it be located, and can it be permitted? Second, if a refiner is going to be penalized for not having the “right” amount of inventory, when there is an issue, they will likely hold inventory in storage, not sell it, creating unnecessary outages or even greater price spikes.” – Erin Graziosi, Rotten Robbie
• “If the goal is to reduce gas prices, this is the exact wrong approach the State should be taking. Slapping more mandates on refiners increases compliance costs that will ultimately be borne by consumers at the pump. Additionally, this bill raises the risk of artificial price spikes because refiners are forced to withhold supply from market to meet the obligations of this proposal.” – Mike Tooley, Tooley Oil Company

CFCA stands ready to work with the Legislature on alternatives that can promote greater stability in California’s fuels market without adding more costs that are ultimately shouldered by consumers at the pump.