From the Daily Caller
Nick Pope
Contributor
Several energy experts say California's latest law cracking down on the state's fuel refineries could cause already-high oil prices to rise even further.
Democratic California Gov. Gavin Newsom signed ABX2-1 into law on Oct. 14, authorizing state bureaucrats to require refineries to maintain certain inventory levels to prevent energy companies from allegedly gouging prices and adding to the anti-fossil push A list of state policies and regulations for the fuel industry. Several energy industry experts said the new policies, on top of those already in place, would further squeeze refiners and fuel producers, disrupt supplies and further drive up prices with the help of other costly regulations that regulate the fossil fuel industry.
According to AAA natural gas price data, California’s natural gas prices are approximately $4.64 per gallon, the highest among U.S. states. Within a week of the bill becoming law, Phillips 66 announced plans to close one of its Los Angeles-area refineries in 2025, which would mean one of nine California refineries and 8% of the state's available refinery capacity would be shut down. , according to the Los Angeles Times. (Related: What has California’s war on fossil fuels actually accomplished?)
“Prices increases have cost Californians billions of dollars over the years, and we won't wait for industry to do the right thing, we are taking action to prevent price increases and save consumers money at the pump,” Newsom said. After the bill. “Now, the state has the tools to ensure they backfill supplies and plan maintenance ahead so there are no shortages that cause prices to rise. I'm grateful to our partners in the Senate and Assembly for acting quickly to advance this process and help provide Californians with relief.
However, prominent natural gas market analyst Patrick De Haan, writing for GasBuddy, dismissed Newsom's contention that energy companies are shortchanging Californians. Instead, he places much of the blame for the state's high energy costs on overzealous regulators and politicians.
DeHaan wrote in an Oct. 15 post to layer of expensive legislation “It’s more like the Newsom administration. “
De Haan wrote in a separate article that he also expects other refiners to follow Phillips 66's lead and close California refineries following the passage of ABX2-1. About 90% of the gasoline consumed in the state is refined at in-state facilities, according to the California Energy Commission, so if supply dwindles and, all else being equal, if more refineries close, prices could rise. . (Related: Energy, business groups ask Supreme Court to block California from forcing the rest of the U.S. to use electric vehicles)
“They keep talking about how companies are driving up prices. In fact, it's the politicians. You just wonder when people are going to wake up,” Dan Kish, a senior fellow at the Energy Institute, told DCNF. “What they're obviously doing is they want all electric cars, so they're looking for ways to raise the cost of gas. They're making gas more scarce and more expensive, and they hope that will help 'nudge' people to do what they want to do, rather than listening to citizens.
Newsom's office has questioned state policy as a major contributor to higher gas prices in the state.
“Natural gas prices are overwhelmingly made up of the cost of crude oil and industry profits,” a Newsom spokesman said in an email to the Daily Caller News Foundation. “Analysis shows last week's legislation will save California billions annually dollars,” the spokesperson continued, further referring to DCNF’s comments from Newsom at a press conference announcing the new refining law.
“In addition, natural gas prices are significantly lower this year than in previous years after the governor signed new accountability and transparency tools,” the spokesperson added.
Andy Walz, president of Chevron's downstream, midstream and chemicals business, blasted ABX2-1 in an Oct. 8 letter to California lawmakers, describing the bill's potential to increase consumer spending. refueling costs, thereby misleadingly attempting to prevent so-called price gouging. Walz wrote in the letter that the new law is clearly political rather than practical and will make natural gas more expensive for Californians in the long run.
“California's policy choices drive away suppliers, resulting in gasoline shortages,” Walz wrote. “We lack incentives for additional refineries and supply. California, stop making consumers worse off.
New laws targeting refineries aren't the only California policy expected to increase gas prices in the near future.
According to Politico, the California Air Resources Board (CARB) will decide after Election Day whether to tighten the state’s Low Carbon Fuel Standard (LCFS), a program designed to reduce the carbon intensity of transportation fuels in the state. CARB initially estimated that doing so could increase gas prices by 47 cents per gallon, but CARB later retracted that forecast.
However, climate economist Danny Cullenward of Penn State's Clayman Center for Energy Policy recently published his own analysis predicting that CARB's upcoming LCFS decision could actually push prices up 65 cents a gallon in the near future. 85 cents per gallon.
Additionally, California has a statewide cap-and-trade program that sets declining limits on major emission sources across the state to incentivize companies to adopt low-emission green technologies. In an interview with DCNF in August, Walz called California's cap-and-trade program one of the state's most aggressive regulatory programs, which prompted his company's decision in August to move its headquarters to Texas and moved out of California.
“Gas prices are rising in California for two reasons, and neither of them has to do with price gouging. The first reason is the additional tax that we're all very familiar with,” Edward Ring, director of water and energy policy at the California Policy Center, told DCNF. “When you subtract all state taxes, fees and programs, that adds another $1.23 to the price of a gallon of gasoline, not including the federal excise tax of 18 cents per gallon.”
“Now, to be fair, the other part that's worth mentioning is that California does have different formulation requirements for gasoline, which does make refining a little more expensive, but again, that's not a huge factor,” Ring continued. “If California wants to protect its citizens from high gas costs, they should probably figure out how to run the state with a little less money, because they're doing a terrible job anyway, and they can lower those taxes.”
CARB did not respond to a request for comment.
All content created by the Daily Caller News Foundation, an independent, nonpartisan newswire service, is free and available to any legitimate news publisher that can deliver a large audience. All republished articles must include our logo, the reporter's byline, and their DCNF affiliation. If you have any questions about our guidelines or working with us, please contact licensing@dailycallernewsfoundation.org.
Relevant
