Mirror Mirrow on the Wall, Who’s at Fault for California’s High Energy Costs?


California Governor Newsom is emphatically finger pointing, scapegoating, and complaining that oil companies are making outlandish profits, but he may be out of touch with the elephant in the room, the mirror on the wall.

While the governor is doing everything he can to shut down oil production in one of America’s most oil-rich states, the governor is blindly pushing California energy policies ahead of our basic energy realities – leaving the state at the mercy of an unstable world for the vast majority of its energy supplies.

While the U.S. scrambles to protect its energy security, California oil production is down 25 percent under Newsom, costing the state and the country millions of barrels of badly needed supply that could help ease prices at the pump and protect against volatility.

Under Newsom’s watch in the last few years, two of California’s refineries have virtually shut down and are no longer manufacturing gasoline, aviation fuels, or any oil derivatives for all the products in our society. Those two, Phillips66 at Rodeo that represented 7 percent of petroleum production capacity, and Marathon at Martinez that represented about 6 percent of in-state capacity, are now only focusing on renewable diesel. Shuttered petroleum refinery capacity is gone for good.

More bad news on in-state refining capacity may occur under Newsom’s second term with the permanent closure of two more California refineries, the Chevron Refinery at Richmond and the PBF Refinery at Martinez. If the courts uphold the 2021 Bay Area Air Quality Management (BAAQMD) rule 6-5 for a further reduction in particulate emissions, both have stated that they will shut down before spending one billion dollars to retrofit their refineries to comply with further particulate emission reductions.

With refinery closures, a short West Coast gasoline market is the new normal. California gasoline demand is made up on in-state refinery gasoline production, movements from the Pacific Northwest, and imports from abroad. When gasoline production falls short, additional supply comes by tanker from around the globe, but it takes 5 to 6 weeks to get cargo into California from abroad.

Read the rest of this piece at heartland.org.

Ron Stein is an engineer who, drawing upon 25 years of project management and business development experience, launched PTS Advance in 1995. He is an author, engineer, and energy expert who writes frequently on issues of energy and economics.

Photo: courtesy Heartland Institute.