Bill Would Regulate Oil Pipeline Supply
A new bill in the state Senate would increase oversight over pipelines in order to monitor potential disruptions in gasoline supplies. SB 767 would create new requirements for operators to report how much oil is flowing through their pipelines so officials can determine the impact of a potential pipeline shutdown on the supply of gasoline.
The bill would require the California Geologic Energy Management Division (CalGEM) to identify by December 31, 2026 “reportable pipelines,” which are pipelines that deliver domestic crude oil feedstock from oil production facilities to oil refineries for processing into transportation fuels.
Operators of these pipelines would be required to report pipeline flows to CalGEM each month, beginning March 30, 2027. The pipeline operate would have to notify CalGEM and other officials if a pipeline flow falls to, or below, its rated minimum throughput levels, risking a shutdown.
The California Energy Commission (CEC), the governor, and specified legislative committees would then determine if the potential reportable pipeline shutdown could result in gasoline supply disruptions.
The bill is part of a push over the past two years for more oversight over the oil industry in response to high gasoline prices. In March 2023, Governor Gavin Newsom signed into law SBX1-2, which gave the CEC new powers to monitor the gasoline market and impose penalties on refiners who charge more than a maximum margin for refining gasoline.
In October 2024, Newsom signed into law AB-1, which authorized the CEC to require oil refineries to maintain minimum inventories of refined fuels, feedstocks, and blending components and to have resupply plans to cover production loss during maintenance.
The Division of Petroleum Market Oversight (DPMO), California’s gasoline market monitor, has recommended increased transparency in the California gasoline spot market and a minimum inventory requirement for oil refiners.