Republicans plan bill to curb spikes in gas prices. Gov. Katie Hobbs calls it 'half-baked'

Republican lawmakers on Wednesday announced a plan they say will avoid gasoline price spikes, like one last spring caused by an undersupply of pollution-reducing gas that cost Arizonans hundreds of millions of dollars.

Senate President Warren Petersen, R-Gilbert, and 10 other GOP lawmakers said a bill they'll soon submit for the upcoming legislative session would allow at least eight blends of gasoline to be used in metro Phoenix. He said those blends "provide similar clean-air benefits" as the blend typically used, Clean Burning Gasoline, or CBG fuel.

Their plan also includes a provision that would grant the state Legislature shared power with the governor to ask the Environmental Protection Agency for a waiver to use different blends when necessary. Currently, only the governor can approve the submission of EPA waiver requests.

"We believe these common-sense proposals will save our citizens anywhere from 30 cents to $1 per gallon and provide much-needed relief in these difficult times," Petersen said.

But a spokesman for Arizona Governor Katie Hobbs poured cold water on the plan shortly after it was announced, telling The Arizona Republic the GOP's proposal was "half-baked."

The announcement followed a June Republic investigation that revealed how oil companies warned the state in March about refinery shutdowns that would impact the Valley's supply of CBG. The investigation revealed Hobbs didn't then request an EPA waiver.

Hobbs' spokesman, Christian Slater, told The Republic at the time her office had been working "behind the scenes" with the EPA for a waiver, whose officials "consistently said one would not be granted."

GOP eyes legislative action

Rep. Alex Kolodin, R-Scottsdale, and Sen. Justine Wadsack, R-Tucson, would submit the legislation, they said at Wednesday's news conference.

Kolodin said while members of the public may wonder if inflation is just caused by "the federal government printing money," the state has more control over some aspects of the problem than many people realize.

"When you increase the options available to supply a market, it has a deflationary impact on prices," he said.

Two of the eight blends supply California, Texas and New Mexico markets. Those blends are produced in more "massive quantities" than the "boutique" CBG blend, which is used nowhere else but metro Phoenix, Kolodin explained.

But the EPA would still have to approve these blends, he added.

Lawmakers and business owners push plan

The lawmakers took the opportunity at the press conference to criticize the Biden administration and praise their own caucus.

Arizonans can "rest assured" that Republicans will work to "east the financial burdens forced on them by the failing big government policies in Washington D.C. and the career politicians across the country," Wadsack said. She called on Hobbs to join the GOP and its conservative Freedom Caucus on the plan.

Several business owners spoke at the press conference about how inflated gas prices had hurt their companies and employees.

Martha Llamas of Jani-King Commercial Cleaning Company said some of her employees make only $2,200 every two weeks.

"This is a janitorial company, they don't make much," she said. "So when the gas prices go up, what do you do? You cut back on food, on milk, vacations, restaurants."

Hobbs' says GOP plan is 'half-baked'

After the news conference, Slater told The Arizona Republic in a written statement that Hobbs "knows Arizona working families need relief from rising costs at the pump," and that she successfully secured two fuel blend waivers this year.

He included two letters from the EPA to Hobbs, dated Sept. 1 and Sept. 21, that show the agency granted the waivers that month to reduce the Reid vapor pressure of the area's CBG "to minimize or prevent disruptions" of the gas supply. The lower vapor pressure makes the gasoline more volatile, and that volatility can lead to the formation of ozone pollution.

But EPA said it agreed the waivers, which were good for 20 days each in September, were necessary to mitigate supply problems that were due to "unplanned outages at several refineries and pipeline disruption caused by Tropical Storm Hillary."

"She will work with anybody if it means lowering costs, but this is a half-baked 'plan' with few details," Slater wrote. "Governor Hobbs will prioritize real solutions over politics and headlines, and looks forward to working across the aisle to deliver those."

Why did gas prices spike in the Valley this year?

Refinery shutdowns in New Mexico and Texas last spring cut off more than half of the supply of CBG, leading to prices that rose over $5 per gallon for a while in metro Phoenix. The Republic's investigation found drivers in other parts of Arizona — and even in Los Angeles, which typically has higher per-gallon prices than anywhere in Arizona — paid significantly less.

The air in metro Phoenix has consistently been rated for ozone and particulate pollution as worse than many other large metro areas for decades, although monitors showed fewer bad-air days last year. In 1998, the EPA approved the Legislature's program to allow the sale of CBG in Maricopa County and parts of Yavapai and Pinal counties as part of its enforcement of the Clean Air Act. The boutique blend reduces ozone pollution in the summer and carbon monoxide and particulates in the winter.

Two large pipelines bring gasoline to Arizona, which has no refineries, from states to the east and west. The Republic obtained a March 8 letter from one of the CBG-making refineries that shut down for maintenance to Hobbs describing the problem. The letter from HF Sinclair said that when the refineries to the east shut down, a California pipeline couldn't make up the difference to meet the Valley's demand.

Jerry Miller, HF Sinclair's senior vice-president of commercial operations, asked Hobbs in the letter to ask the EPA for a waiver.

The late Sen. Frank Pratt, R-Casa Grande, in 2020 sponsored a bill that would have allowed other gas formulations to be used - contingent on EPA approval - in case of a potential supply shortfall. Senate Bill 1477 had bipartisan support in the Senate but was not advanced during the COVID-19 pandemic.

Gas prices have dropped to an average of $3.39 across Arizona, according to a report last week.

Petersen said that if the legislation gets passed next year and an interruption of the gas supply occurred again at any time, Arizonans would save money at the pump even when prices are much lower than they were in the spring.

Reach the reporter at rstern@arizonarepublic.com or 480-276-3237. Follow him on X @raystern.

Ryan Randazzo's reporting contributed to this article

This article originally appeared on Arizona Republic: Republican bill aims to curb spikes in metro Phoenix gas prices