In December 2022, the California State Legislature passed Senate Bill X1-2, which Gov. Gavin Newsom signed into law in March 2023. The law went into effect on June 26, 2023.
The legislation is meant to root out what Newsom calls “illegal gouging by greedy oil companies.”
California’s law to combat price gouging is the first of its kind in the nation, but a Washington state lawmaker attempted to pass similar legislation this session – unsuccessfully – but may try again in 2025.
“We engaged with the Western States Petroleum Association on how we would craft that,” state Sen. Joe Nguyen, D-White Center, told The Center Square, “and would it make sense?”
According to Newsom’s website, California’s legislation would require daily market reports to expose price manipulation in real time.
It also established a watchdog group called the Division of Petroleum Market Oversight to monitor the industry.
California has the highest gas prices in the nation, averaging more than $5 per gallon as of Tuesday. The average is much higher in some parts of California, where it is more than $6 per gallon.
Nguyen’s similar price-control legislation would require the Washington Utilities and Transportation Commission to gather detailed pricing, profit margin, and transaction data held by fuel suppliers, refinery operators, and others in the transportation fuels supply chain.
The UTC would then analyze and report on that data – including retail fuel prices and the profits of the industry as a whole and major firms within it – to the governor, Legislature, and public.
“Candidly, I think our policy was probably more thoughtful because we had more buy-in,” Nguyen said.
So why didn’t the legislation go anywhere?
“It was a short session,” Nguyen explained. “The budget office needs are unlimited, and when you have a fiscal note that comes back in the tens of millions, it becomes a bit tricky.”
He said lawmakers would continue the conversation because the oil industry needs oversight.
“We are seeing irregular patterns of behavior [pricing] where it’s going up and down,” he said.
According to AAA, Washington gas prices averaged $4.48 per gallon on Tuesday, with San Juan County paying $5.28 per gallon.
The national average is $3.52 per gallon as of June 4.
Andy Walz, president of Chevron Americas Product, wrote a letter to the California Energy Commission stating that the price-control law would deter investment in the region’s energy market.
Nguyen hit back at that assessment.
“I have no love lost for Chevron,” he said. “At the same time, they were doing record profits, they were also doing stock buybacks, so I would imagine a $48 billion stock buy-back from Chevron probably impacts fuel prices.”
Nguyen conceded these regulations are probably best handled by the Federal Trade Commission, not at the state level.
“The hardest part for us [Washington]is the [federal] Commerce Clause,” he said. “We cannot do something that would unduly benefit or burden a company in Washington state over another.”
Washington’s lack of refineries is also a factor, Nguyen noted.
“We’re very susceptible to shortages and maintenance issues because we only have a handful of refineries here,” he said.
Washington has five refineries: one in Blaine, one in Ferndale, two in Anacortes, and one in Tacoma.
