((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
Chevron CVX.N said Tuesday that California's recently passed legislation requiring oil refineries to maintain minimum fuel inventories was “erroneous,” according to a letter the company sent to state members of Congress .
California, the most populous U.S. state, regularly experiences some of the highest average gasoline prices in the country, leading to often tense relations between the state and oil companies.
California is geographically isolated from the refining centers of the Gulf Coast and Midwest, and must produce all of its own fuels or import them from Asia.
In the letter from Andy Walz, president of Chevron's Downstream, Midstream and Chemicals division, he says that increasing regulation on the grounds that “price increases are profit increases” is “misleading.”
On October 14, California Governor Gavin Newsom signed ABX2-1, a bill intended to prevent fuel shortages in the state and give regulators at the California Energy Commission (CEC ) greater control over oil refineries operating in the state.
It allows the CEC to require refiners to maintain minimum fuel stock levels and to manage refinery shutdowns and maintenance in consultation with workers and industry stakeholders, so as to minimize the impact of production losses linked to maintenance on fuel prices.
If refineries fail to comply with these requirements, they could be fined at least $100,000 per day for each day of non-compliance.
“We argue that enforcing a mandatory minimum inventory will likely have two negative consequences: an increase in the frequency and duration of supply shortages and a permanent increase in gasoline prices for consumers,” said Mr. Walz, of Chevron, in the letter.
“Both of these risks extend beyond California, which should prompt lawmakers to exercise caution, as policies that raise prices in the state could also affect neighboring Arizona and Nevada
Governor Newsom's office did not immediately respond to a request for comment.
