California Governor Gavin Newsom is pushing for a quick study into the viability of a new gas blend that could lower fuel costs for Californians. In a recent directive to the California Air Resources Board (CARB), Newsom advocated for accelerated action in analyzing the potential of incorporating a larger percentage of ethanol into gasoline, a move suggested to reduce prices at the pump by as much as $0.20 per gallon, as outlined in a report from the Governor's office.
Studies from notable entities such as the University of California, Berkeley, and the United States Naval Academy support the notion suggesting that Californians could benefit from up to $2.7 billion in savings annually, although thrusting this initiative forward warrants a careful consideration of market structures and the need for infrastructure changes to accommodate the E15 fuel which is composed of 15% ethanol and has been adopted in other states; E15 is currently available at over 3,000 stations across 31 states.
Moreover, research from the University of California, Riverside indicates that using more ethanol in gasoline wouldn't affect nitrogen oxide emissions and could reduce particulate matter emissions. Newsom emphasized the dual advantage of this initiative, stating, "There’s massive potential for this to be a win-win for Californians: lowering gas prices by up to twenty cents per gallon while keeping our air clean," reflecting on ongoing endeavors to contain fuel prices and hold the oil industry accountable.
Following spikes in gasoline prices in 2022, Newsom called for a special session which resulted in legislation designed to keep oil companies in check; this included laws that required refiners to maintain sufficient fuel inventories to prevent supply shortages that lead to increased consumer costs and to also plan for resupply during scheduled maintenance to prevent price jumps, last week Newsom signed additional legislation that aims to avoid the very price spikes that bled Californians of approximately $2 billion in the previous year, seeking to bring more transparency to the oil industry and forestall profiteering at the expense of ordinary citizens.
In early 2024, a state watchdog assigned to monitor fuel prices sent a set of proposals to the Governor and the legislature to reform California's gasoline spot market. The proposals were a result of findings that attributed the 2023 gas price hikes to refineries going offline without proper backup plans, which consequently led to soaring refining margins and thus higher spot and retail prices. These reforms appear to be part of a broader effort to counter the historically volatile fuel pricing in California and bring some degree of relief to residents across the state.
