Gov. Gavin Newsom announced the closure of his Los Angeles refinery complex just hours after signing the bill regulating Phillips 66. The company, without actually using those words, said there was no reason to stay and be mistreated. [emphasis, links added]
In a ceremony designed to convey that the governor is doing some good things, Newsom signed Assembly Bill X2-1.
it empowers the state “Refiners are required to maintain minimum fuel inventories to avoid supply shortages.”
It also aims to limit “the industry's higher profits”, and further Empowers the bureaucracy to force “refineries to develop replenishment plans during refinery maintenance outages.”
Two days later, Phillips 66 announced it would close the refinery, which includes a plant in Carson and another five miles away in Wilmington connected by a pipeline, in the fourth quarter of 2025.
The two stations have been in operation for more than a century, delivering “millions of barrels of gasoline” to Southern California drivers, according to the Los Angeles Times.
The company considers the “long-term sustainability” of the Los Angeles refinery “uncertain,” which is a polite way of putting it. Lawmakers are creating adverse business conditions that make it difficult for traditional energy companies to operate.
Approximately 600 Phillips 66 employees and 300 contractors will be affected. at the same time, The wallets of tens of millions of California car owners will be directly affected.
While Phillips 66 pledged to “work with California to maintain current levels and potentially increase supply to meet consumer demand,” Sacramento is trying to ensure an adequate supply of gasoline by adding another layer of regulations that will result in reduced production.
This will reduce supply, which means In a state where gas prices are already among the highest in the country, filling up will cost even more.
The closure of Phillips 66 will leave the state with just 16 refineries to produce 2 million barrels of California Premium Blend – This cannot be produced elsewhere, is more expensive, and requires oil companies to invest billions of dollars in upgrading their production systems.
The losses are huge.
The Energy Institute said California's refining capacity has already dropped 12% between 2017 and 2021, and “much more is likely to be lost.” With the introduction of the new law, More refineries may choose to follow Phillips 66's lead and close their facilities or cut operations.
Another option is to import fuel produced elsewhere. In a distant land. Californians can't see how the sausage is made, so they can consider themselves conscientious stewards of the environment because they've done away with refineries.
As anyone should have expected, China – with its lenient approach to Third World environments – “is coming to the rescue,” says author and energy analyst Ronald Stein. “There are 88 new refineries in Asia producing petroleum derivatives, which are the basis for most products used by humans.”
Despite policymakers’ optimistic rhetoric about delivering lower prices to consumers, we are watching the slow deconstruction of California’s oil industry.
Some cities are cracking down on new gas stations.
Exxon Mobil said The country's regulatory regime has hampered efforts to restart offshore production.
Attorney General Rob Bonta recently sued Exxon Mobil, claiming the company engaged in “deceptive public messaging about plastic recycling” even though the company was simply following state requirements.
Bonta admitted earlier this year One of the goals behind another lawsuit filed in 2023 against five oil companies is to make oil and gas “more expensive” to discourage the use of these energy sources.
Read the break from Pacific Institute
