ABx2-1 requires refineries in the state to maintain certain levels of inventory so that when one goes down for maintenance or other reasons, it doesn't create a spike in gas prices due to a fuel shortage.
Newsom signed the bill into law in the capitol rotunda, saying the oil industry has been manipulating prices and overcharging for gas.
"They've been fleecing you for decades and decades, billions and billions of dollars," Newsom said, referring to oil companies. "They've been screwing you for years and years and years. There's no other way to put it."
Newsom says the plan is backed by economists, consumer organizations and environmental advocates, but the oil industry is not on that list.
The Western States Petroleum Association says the governor's plan will actually boost prices - that consumers will end up paying for extra storage costs year-round.
WSPA president and CEO Catherine Reheis-Boyd writes:
"Today, legislators pointed to $2 billion in costs from last year's gas price spikes. What they didn't mention is that upcoming amendments to the LCFS (Low Carbon Fuel Standard) program, according to the California Air Resources Board, could add 47 cents per gallon - a $6.1 billion hit to Californians based on 13 billion gallons of gasoline consumed annually.
"So while the Governor rushed ABX2-1 through in a special session, his regulatory body is advancing a proposal that will cost Californians three times last year's price spikes."
Newsom though was quick to go on the offensive, warning Californians that the oil industry cares only about padding its bottom line.
"They are the polluted heart of this climate crisis," he said. "They continue to lie, and they continue to manipulate. And they're taking advantage of you."
The California Energy Commission is now tasked with determining how much extra fuel refineries are expected to store. Newsom says the effects of the new law will most likely be felt starting next summer.