“California’s Refinery Rethink”Politico Pro, Oct. 22 |
“Newsom Courts Big Oil as Gas Prices Threaten Political Ambition”Bloomberg, Sept. 29 |
“Faced with looming gasoline shortage, California’s governor backs off oil companies”Le Monde, Oct. 11 |
“Gas Price Map Shock: Why Gas Is $4.60 in California but $2.60 in Oklahoma?”Autoblog, Oct. 18 |
The headlines keep coming because decades of poorly-thought-out and agenda-driven policies and regulations have made California into a gasoline island that is sinking. Refreshers that explain how this happened can be read here, here and here.
The damage, having been wreaked over a number of decades, is quite extensive. The question today, then, is: How is the state going to return to some degree of normalcy in regard to gasoline supply and prices?
Policymakers are desperate to find answers, while the market tries to work around stubborn government obstacles:
E15. Assembly Bill 30, signed by Newsom in October, allows an additional blend of gasoline to be sold in California, one that is made of 15% ethanol, a biofuel produced from corn. Bill author Assemblyman David Alvarez, a San Diego Democrat, believes his legislation will “reduce the cost of gas and maintain our commitment to a cleaner environment.” While a gallon of E15 might cost 20 cents less than a gallon of gasoline with 10% ethanol, the savings are offset by E15’s lower fuel density, which yields reduced mileage. Savings are also discounted by engine and fuel-line damage caused by E15 that can affect new cars and hasten the death of older ones. The blend might also be more harmful to the environment.
Drilling permits. Newsom also signed Senate Bill 237 to increase the issuance of new drilling permits. CalMatters reports “A key part of the measure waives the state’s landmark environmental review law for new oil wells in Kern County and clears the way for drilling projects to receive permits that were tied up in nearly a decade of litigation.”
Saving refineries. At least two California refineries are closing, leaving the state with only a dozen to produce the 38 million gallons of boutique blend that Golden State motorists demand every day. Sacramento is so desperate to unwind the harm that has caused these companies to flee that it is looking for buyers to keep at least one of the facilities operative. The general counsel for Valero, which will shut its 145,000-barrel-per-day Benecia refinery by next spring, said the company has “been in discussions with California, but nothing has materialized out of that, and so as a result nothing has changed.” As far as we know, the state hasn’t ruled out the “policy option” of taking over the refineries and running them.
Pipeline into California. This one might work, if policymakers have the courage to stand up to the eco-radicals who will obstruct this project. Phillips 66, which is closing its refinery complex in Los Angeles, and Kinder Morgan, an energy infrastructure firm, have proposed building a pipeline that will move refined Texas products “to key downstream markets in Arizona and California, with connectivity to Las Vegas.”
Called the “Western Gateway,” the “project combines new and existing infrastructure to create an efficient and scalable corridor that addresses growing Arizona demand and anticipated California supply constraints,” says Phillips 66.
The Great Gasoline Panic of ‘25 could have been avoided if lawmakers, going back a quarter century or more, would have used a bit more foresight and had not sold out to green extremists who are demanding that fossil fuels be abolished. They have about two years to fix the problems – and save Gov. Gavin Newsom’s presidential ambitions.
Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.
