SACRAMENTO, Calif. — California lawmakers in the State Assembly returned to Sacramento this week for the first set of hearings of Gov. Gavin Newsom’s special session on gas prices and oil supply.

The governor’s proposal would require refiners to have a backup oil supply that he says will prevent gas price spikes, but the oil industry claims it will do the exact opposite.

The special session is taking place as Californians continue to pay more for gasoline than drivers in any other state. Gas prices are currently higher in Northern California due to two refineries in the Bay Area undergoing maintenance. 

According to the American Automobile Association, the average cost per gallon in California is $4.77, compared to the national average at $3.22.

Assemblywoman Cottie Petrie-Norris is the chair of the committee that’s addressing the issue.

“We are really digging in. Trying to understand what’s causing price spikes, what’s causing profit spikes. The bottom line is that we want to deliver relief and savings for California families,” she said.

The discussions are taking place during a time of the year when several California refineries undergo maintenance, which means they go offline and less gas is available.

“Private sector firms have [an] incentive and obligation to earn a profit, and so their decisions about how much to store for a rainy day are determined by profit incentives, and in particular, holding onto additional product so you can sell it when prices are high and drive down prices can cannibalize the money you’re already making during that period,” said Neale Mahoney, an economics professor at Stanford University.

If Newsom’s proposal passes, refineries would be required to maintain minimum fuel inventories, which Newsom’s administration claims will prevent shortages and price spikes.

Siva Gunda, vice chair for the California Energy Commission, said planning ahead of time could prevent prices from increasing while refineries go experience maintenance and outages.

“If you know the planned event is going to happen, could you make sure you have some inventory stored so we can get through the events without gas spikes,” Gunda said.

However, officials in the oil industry note it’s not that simple. Kevin Slagle with the Western States Petroleum Association says a mandate to require refiners to have a backup supply will not lead to prices dropping.

“Refineries operate very efficiently in a certain way where fuels are coming in and out. The supply capacity is already used fully, so there’s not excess capacity to wind up or to wind down,” Slagle adds.

Slagle says refiners don’t have the capacity to keep extra gasoline on hand. Industry leaders say building an additional tank could cost around $35 million. 

“There’s no tank farms being unused and the idea that we can just go build storage in California I think is pretty tough politically and it would also be costly,” Slagle said.

He indicates the reason prices are drastically higher in California is because of the state’s policies and regulations.

“California has tougher environmental regulations and in a lot of cases that’s good. We have cleaner air and those things are important, but all those programs come with costs.”

Republican lawmakers introduced their own set of proposals, which include suspending the gas tax and providing drivers who have a gas-powered vehicle with a $100 rebate.

“This is the perfect time to discuss the issues. You can’t just look at the governor’s proposals — we’re the legislature. The governor is not a member of the legislature so we should have our own proposals and that’s what we introduced as republicans,” Patterson said. 

Patterson adds he’s concerned the governor’s proposals will lead to more refiners leaving the state.

“These refiners don’t need to be in California. They can go anywhere else…and if they continue to add more regulations, you’re going to see us getting more oil from foreign countries.”

Meanwhile, the State Senate has not returned to Sacramento for the special session.

“They have said if we pass a bill as part of the work we’re doing in this special session that they will then reconvene to consider that legislation and take that next step,” Petrie-Norris explained.

The hearings this week were all informational, meaning no vote or decision has been made yet. The Assembly has another hearing scheduled on Sept. 26, where they will vote on the bills introduced in the special session.

“The scope of the special session is really determined by the governor’s proclamation, which in this case is narrowly focused on issues of gasoline supply and liquidity so the proposals that we’ll consider as part of this special session will be limited by that scope,”  Petrie-Norris said.

All proposals must pass by Nov. 30, which is when the special session ends.