Sacramento, CA – Alessandra Magnasco, Governmental Affairs and Policy Director of the California Fuels + Convenience Alliance (CFCA), today testified before the California State Assembly Select Committee on Petroleum and Gasoline Supply, sharing the following comments urging legislators to consider the impact policies have on Californians’ access to affordable fuel.

“Good morning, Chair and Members of the Committee. My name is Alessandra Magnasco, and I represent the California Fuels and Convenience Alliance, which advocates on behalf of fuel marketers, common carriers and gas station owners across California. I appreciate the opportunity to share how current energy policies and supply disruptions are affecting the downstream sector of our fuel supply chain.

California is often referred to as a "fuel island." This means that the transportation fuel supply within the state is both geographically and logistically isolated. No other state in the contiguous U.S. refines the gasoline that we use because while it is the cleanest in the world, it is also extremely expensive and difficult to produce. As a result, the fuel we use must either be refined in-state or imported from foreign sources.

Unfortunately, we are now down to only nine refineries in California that produce gasoline. This leaves our supply incredibly tight and vulnerable to disruption. State policies have also played a significant role in shrinking this supply. Over the years, numerous regulations have disincentivized investment in local refining capacity, which is why we're seeing lower production and higher prices at the pump.

In addition to these policies, there are also infrastructure challenges that complicate the supply chain. The Jones Act and its burdensome requirements effectively make it cost prohibitive to move fuel between Southern and Northern California by barge and we lack a pipeline that connects the two regions.

Effectively, this has made California not one, but two separate fuel islands, with trucking being the only option for transporting fuel between the two.

Making matters worse, our heavy reliance on foreign imports makes us beholden to external factors that are beyond our control. Geopolitical tensions or weather events in distant regions could choke off critical fuel supplies.

To be clear, importing is not a bad thing overall. In fact, our part of the supply chain does import, and this helps bring extra liquidity to the market. But if we put ourselves in a place where we are only reliant on imports because refiners leave the state, we will be putting ourselves in a dire situation. When these disruptions occur, drivers across California risk being stranded without fuel, with no immediate solution.

The fragility of our supply chain is compounded by the fact that we cannot quickly adjust to these interruptions due to our dependence on far away foreign suppliers and the limitations on internal fuel movement.

Looking ahead, statewide policies such as the ban on internal combustion engines, a more stringent Low Carbon Fuel Standard and cap-and-trade program, and a pending gross profits cap on refiners are poised to exacerbate this already challenging situation. These policies will further limit in-state fuel production and shrink our tight supply even more.

15 local governments have banned new gas stations, effectively banning new competition from entering the market. That’s a pretty terrible policy if you want to bring down prices.

We heard yesterday that to get this right, there would be close collaboration with industry. However, the advisory committee this bill creates that would be tasked with “getting this right” doesn’t have a single representative from industry.

In fact, the bill expressly prohibits anyone that has “been employed by, contracted with, or received direct compensation from, a company that produces, refines, distributes, trades in, markets, or sells any petroleum product in the preceding 12 months.” So, collaboration doesn’t sound like it’s off to a great start.

When supply tightens or regulations change, smaller businesses are disproportionately affected, as they have less room to navigate higher wholesale prices and increased compliance costs. We are the part of the supply chain that adds competition to the market. If we get this wrong it will be our smallest operators who won’t be able to weather extended shortages, fuel rationing, and skyrocketing prices.

Australia, who this policy proposal is modeled after, is currently subsidizing their few remaining refineries to the tune of billions of dollars to keep them operational. I guess we better start making some significant room in the state budget if we are going to follow their lead.

In summary, California's fuel supply is fragile, and existing and future policies threaten to further destabilize it, pushing costs higher for consumers and creating ongoing volatility in the market.

I urge you to consider the far-reaching consequences of these policies and how they may further harm Californians and their access to affordable fuel.

Thank you.”

You can learn more about what drives California’s high gas prices and the small business proprietors who own 90% of the state’s gas stations here.