Owen Klinsky
Contributor
California regulators have proposed a variety of government intrusions into the petroleum industry in order to combat future energy price surges, according to a report released Thursday by the California Energy Commission (CEC).
As the Golden State continues to pursue its green agenda, the CEC expects some of California’s nine oil refineries to be shuttered due to falling demand, which would give the remaining refineries increased pricing power and raise the possibility of a surge in gas prices, the study concluded. To solve this problem, the commission proposed a variety of government interventions, including expanded regulation on private refineries, the establishment of state-owned refineries and an increase in imports. (RELATED: Chevron Leaving California Behind After Years Of ‘Adversarial’ Dem Policies)
“The deployment of ZEVs [zero-emission vehicles] and a robust mass transit system are critical for achieving the state’s climate goals, reducing local air pollution, and eventually eliminating dependence on the volatile global petroleum markets. As demand for gasoline shrinks, refineries may close or convert to processing clean transportation fuels,” the report states. “This will lead to fewer gasoline refineries, with increased market concentration and associated market problems that often accompany it.”
To address the market concentration issue, the CEC proposed a variety of state interventions, including setting up state-owned refineries.
“The State of California would purchase and own refineries in the State to manage the supply and price of gasoline,” wrote the study’s authors, with the scope of the initiative ranging from “one refinery to all refineries in the state.”
However, the CEC appeared to question whether creating state-owned refineries to replace privately-owned refineries pushed out of business by government energy policy was counter-intuitive, asking, “as demand for fossil fuel declines, will the presence of State-owned refineries inhibit an orderly phase out of refinery capacity?”
The CEC also suggested increasing oil imports, saying, “as the transition unfolds, California may wish to consider developing a relationship with a supplier and refiner or marketer to bring CARBOB [California-specific gasoline] into California via regular ship loads so consumers are assured a reliable import supply.”
Finally, the California Energy Commission proposed new regulations, “requir[ing] refiners and terminals to maintain contingency reserves of gasoline fuel in refineries and terminals,” that they’d be required to release “during price shocks.”
California is set to ban the sale of purely gas-powered vehicles purely gas-powered passenger vehicles after 2035. However, “even under the most aggressive scenario transition to ZEVs [zero-emission vehicles], millions of petroleum fueled vehicles are anticipated to remain on California’s roads and highways beyond 2035,” the CEC study concluded. “These vehicles will need fuel to operate, and many of the vehicles may be owned by lower income individuals and families, making it even more compelling to identify ways to ensure an affordable, reliable, equitable, and safe supply.”
The study noted that “Californians already pay higher than the national average for gasoline… partially due to state and federal mandates for improved air quality.” In 2022, after energy prices surged following the onset of the Russia-Ukraine war, wholesale gasoline prices in California spiked to $6.21 per gallon, “$2.61 higher than the U.S. average.”
The California Energy Commission did not immediately respond to a request for comment.
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I worked in many technical capacities in a professionally run refinery owned by a well known major oil company for ten years. The refinery was staffed with competently trained personal, had up-to-date detailed documented safety procedures, with well inspected and properly maintained equipment.
Because of petroleum’s physical properties and the refinery process operating conditions, any refinery is an inherently dangerous situation. Heated above its flash point in the absence of air, the petroleum is just waiting for any mistake, leak, equipment failure or accident to allow contact with air (oxygen).
In spite of everyone’s best efforts, there were unfortunately explosions, major fires and deaths. However, without the courageous skilled work force, fire fighting equipment and training, these few, but serious, incidents could have easily become major disasters shown on the evening news with consequences for the neighboring community .
I shudder to think what would happen if California took over and attempted to operate a state run petroleum refinery. The CEC has no idea the technical challenge or risk they would be assuming. It is no place for amateurs.
Being taken over by people who couldn’t manage a lemonade stand. Mix in some DEI to make it look good. If you live anywhere near a refinery, best sell now before the situation becomes too obvious.
The whole of Saudi oil/gas industry is state run. Same in many many countries. The Saudis sent many students to study in leading petroleum engineering colleges in other countries as well as their own institutions. Its a technical job , just like many aspects of the military
Its sounds like you lived a life without any travel in your work
Do the Saudis hire and promote based on merit or DEI targets? Sounds like you know little about progressive democrats.
I’ve started to notice that State Legislatures when captured by wingnut politicians with no critical thinking skills and controlled by the reality distortion of the MSM, have no timely external oversight except for the slight chance of an occasional honest election or the guillotine,.
Oh, California. Please do this! Watching people who couldn’t manage a lemonade stand run something as complex as an energy supply chain will be glorious entertainment, although I do feel bad for the remaining Californians who can’t afford to escape the state.
If only there was a field of study dedicated to predicting how this will all turn out.
“Gov’t Takeover Of Oil Refineries”
Ah.. putting the operation in the hands of low-end law and humanities students.
Make sure you have DEI people in the top half dozen roles…
What could possibly go wrong !…………. apart from everything. !
Government-run oil refineries. What could go wrong?
Commienomics.
“Falling demand will increase prices!”
“Government takeover fixes market concentration problems!”
“Price controls have no effect on supply and supply mandates have no effect on prices!”
And, of course, the old standby: “It’s not corrupt profiteering if government is in charge of it!”
I guess someone needs to dig up images of gas lines in the late 1970s to see how effective price controls were.
The sad thing is so many in California will keep voting these nitwits into office.
How does the CEC plan to refuel planes, marine vessels, trains and trucks that bring goods and refined products into the state? Did they figure this out?