SB X1-2 Workshop on Maximum Gross Gasoline Refining Margin and Penalty

The California Energy Commission (CEC) will host a workshop to explore potentially establishing a Maximum Gross Gasoline Refining Margin (Max Margin) and Penalty pursuant to Public Resources Code section 25355.5. Among other things, SB X1-2 increases transparency through new data collection and reporting, creates an independent division to monitor petroleum markets and flag potential market manipulation, and requires the CEC to assess the transportation fuels market and identify methods to ensure an adequate, affordable, and reliable fuel supply as the state transitions away from petroleum fuels. SB X1-2 authorizes the CEC to set a maximum gross gasoline refining margin (Max Margin) and a penalty for refiners that exceed it. The CEC is launching this informational proceeding to explore potentially establishing a Max Margin and penalty.

On October 18, 2023, the CEC adopted an Order Instituting Informational Proceeding (OIIP) to collect information and perspectives on establishing a Max Margin, and if a Max Margin is warranted, determine the level it should be set at and the associated penalty to be imposed on 2 refiners that exceed the Max Margin. Prior to setting a Max Margin and penalty, the CEC must find: “…that the likely benefits to consumers outweigh the potential costs to consumers.” The CEC has discretion to consider all relevant factors in making this determination, including:

1. Whether a Max Margin and penalty are likely to cause greater imbalance between supply and demand in the California transportation fuels market.
2. Whether a Max Margin and penalty are likely to cause higher average prices at the pump on an annual basis.
3. Whether case-by-case exemptions from the Max Margin will allow refiners to demonstrate the need for a greater margin before making production decisions.

This informational proceeding seeks to establish a record of stakeholder input from multiple perspectives, including those of consumer advocates, environmental justice and environmental groups, labor, industry, academia, and the public. CEC staff will use the input received through the Informational Proceeding to develop recommendations for the Max Margin, penalty, and exemptions from the penalty, if applicable.

A majority of commissioners may participate, but no votes will be taken.

The public can participate in the workshop consistent with the attendance instructions below. The CEC aims to begin promptly at the start time posted and the end time is an estimate based on the proposed agenda. The workshop may end sooner or later than the posted end time.

Notice and Agenda

• Notice of SB X1-2 Workshop on Maximum Gross Gasoline Refining Margin and Penalty
• Workshop Schedule

Transcript

• Transcript of SB X1-2 Workshop on Maximum Gross Gasoline Refining Margin and Penalty

Presentations

• SB X1-2 Workshop on Maximum Gross Gasoline Refining Margin and Penalty
• MGGRM Economics 101: Price Theory and Regulation

Event Recording

• SB X1-2 Workshop on Maximum Gross Gasoline Refining Margin and Penalty - Zoom