Newsom, Lombardo trade blows over gas prices

SACRAMENTO, California — Democratic and Republican governors of neighboring western states are duking it out over high gas prices.

Nevada Gov. Joe Lombardo, a Republican, sent a letter Tuesday to California Gov. Gavin Newsom warning him against imposing a cap on oil refineries' profits that he said could affect his own state's fuel prices.

“While we have no details on what this might look like, I’m concerned that this approach could lead to refineries either constraining supplies of fuels to avoid a profit penalty or even leaving our shared fuels market entirely,” Lombardo wrote, pointing out that 88 percent of his state's fuels are delivered from California via pipeline or truck. “Either scenario would likely lead to limited supplies and higher fuel costs for consumers in both of our states.”

Newsom’s staff on Wednesday offered a tough response, accusing the Republican governor of politicizing rising gas prices on behalf of oil industry allies and trying to pass off blame.

“This is a stunt to appease Governor Lombardo’s Big Oil donors, who contributed tens of thousands of dollars to his campaign,” Newsom spokesperson Alex Stack told POLITICO in a statement. “He’s parroting their talking points, and he knows full well that oil refiners are driving up gas prices and making massive profits — harming residents of both of our states. Price spikes are profit spikes, and California is holding Big Oil accountable.”

Newsom's California Energy Commission is set to decide on the profit cap at a time when fuel prices are rising in both states. California lawmakers, who authorized the CEC to impose the profit cap in a law that Newsom signed last year, have since expressed some concerns that it could end up driving fuel prices higher.

Newsom has fought bitterly with oil companies, imposing new levels of scrutiny on their prices, joining state Attorney General Rob Bonta in a massive lawsuit over their role in advancing climate change and backing the November campaign to keep California’s oil well setback law . On Wednesday, Newsom arrived at the Vatican for climate talks with the Democratic governors of New York and Massachusetts.

On the other side is Lombardo, a former Clark County sheriff who last year pulled Nevada out of a multistate coalition focused on combating climate change’s effects. Lombardo also appointed a fossil fuel executive to head the state’s Office of Energy. Dwayne McClinton, who had served on the governor’s transition team , was a former lobbyist and a senior legislative policy adviser at Southwest Gas Corp., an energy company that supplies natural gas.

Last week, a representative from Arizona testified at a California state Senate committee hearing on the CEC's proceeding. Arizona state Rep. Justin Wilmeth, a Phoenix Republican, said a potential maximum refinery margin and penalty “may actually increase retail prices for California, Nevada, and Arizona consumers alike.”

“It may also cause California refineries to close prematurely,” he said. “These decisions will harm Arizona and they will harm Nevada.”

But the neighboring states have not engaged in the process until recently, with no representatives from the Nevada government weighing in during California’s special session on gas price gouging. “Not the state,” Stack said of Nevada. “No state entities. We can confidently say that.”