What you need to know: Governor Newsom urged CARB to more quickly study the implementation of increased ethanol blending in gasoline, which could help to lower prices by up to $0.20 per gallon and save Californians as much as $2.7 billion every year - with little to no impact on the environment. 

SACRAMENTO - Governor Gavin Newsom today issued a directive to the California Air Resources Board (CARB) to expedite measures that could lead to lower gas prices without compromising environmental protections.

Building on legislation passed in 2023 and 2024 to prevent price spikes and increase transparency in the oil industry, the Governor’s order directs CARB to accelerate studying how California could increase ethanol blending in gasoline (E15), which studies have shown could reduce prices while maintaining environmental protections.

“There’s massive potential for this to be a win-win for Californians: lowering gas prices by up to twenty cents per gallon while keeping our air clean. It builds on our efforts to keep gas prices low by holding Big Oil accountable and helping prevent price spikes at the pump.” - Governor Gavin Newsom

How it works

According to a study conducted by the University of California, Berkeley and the United States Naval Academy, this could lower gas prices by up to $0.20 per gallon and save Californians as much as $2.7 billion annually, but also would require strategic considerations regarding market structure and infrastructure modifications.

E15 fuel, which contains 15% ethanol, has been widely adopted in other states and could significantly reduce prices without adding environmental harm. As of 2023, E15 was sold at more than 3,000 stations in 31 states.

Another study from the University of California, Riverside found that increasing ethanol blending in gasoline would not affect NOx emissions and would reduce particulate emissions.

Keeping gas prices low & holding Big Oil accountable

Last week, Governor Newsom signed legislation that allows the state to require oil refiners to maintain a minimum inventory of fuel to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry. It also authorizes the California Energy Commission to require refiners to plan for resupply during refiner maintenance outages. It will help prevent price spikes that cost Californians upwards of $2 billion last year.

Following gasoline price spikes in 2022, Governor Newsom called for a special session and worked in partnership with the Legislature to sign into law a package of reforms holding Big Oil accountable. 

California’s new watchdog found that higher gasoline prices were caused by a suspicious market transaction, refinery maintenance without properly preparing for it, and more. 

In January of this year, the watchdog sent Governor Newsom and the legislature a letter outlining specific proposals to reform California’s gasoline spot market, which included a minimum inventory requirement to prevent price spikes due to lack of stable supply.

The state’s gasoline price watchdog also found that, in 2023, gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies, which caused refining margins to spike as spot and retail prices jumped - indicating that refinery margins made up the largest proportion of the price spikes between July and September 2023.