California crowed that it 'finally beat big oil' 2 years ago. Regulators just halted the landmark penalty payments

California energy regulators postponed a planned profit-based penalty on oil companies until 2030 after two refineries accounting for roughly 18% of the state's refining capacity announced closures. The commission holds authority to impose such a penalty but has not acted since being granted that power in 2023. The pause is framed as a measure to protect fuel supply and consumers during the transition away from fossil fuels. The state plans rules requiring refineries to hold minimum fuel inventories and proposes temporarily streamlining approvals for new wells in existing fields to maintain supply. Consumer advocates criticized the pause and warned of potential price spikes.

California energy regulators Friday put the brakes on plans requiring oil companies to pay a penalty if their profits climb too high, a temporary win for the fossil fuel industry two years after the governor declared the state had "finally beat big oil." The postponement by the California Energy Commission until 2030 comes after two oil refineries accounting for roughly 18% of the state's refining capacity announced their plans to close in the coming months.

Siva Gunda, the commission's vice chair, said the state is not "walking back" its efforts to wean itself off fossil fuels but must prioritize protecting consumers at the gas pump. "I personally truly believe that this pause will be beneficial to ensure that this mid-transition is smooth," he said. The commission still plans to set rules that would require oil refineries to keep a minimum level of fuel on hand to avoid shortages when refineries go offline for maintenance.

Jamie Court, the president of Consumer Watchdog who supported the law, said the energy commission's vote is "basically a giveaway to the industry." "I'm really disheartened and disgusted by Newsom," he said. "I feel like this is just a total about-face. And in the end it's going to result in greater price spikes." But the Western States Petroleum Association recommended that the state postpone a penalty for 20 years.

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