The petroleum industry has pushed back, saying the mandate would hurt consumers.
Legal Insurrection readers may recall my report about Chevron’s California operations.
Chevron had been headquartered in California for over 140 years, giving it strong roots in this state. However, the toxic policies of California’s lawmakers and regulators have killed those roots.
The fossil fuel giant will relocate to Texas.
Sacramento sees gasoline firms and petroleum refineries as cash cows that will always agree to be milked despite being made into a climate villain and accused of corporate greed.
So, to resolve the state’s serious energy challenges, California Gov. Gavin Newsom called for a special session Saturday after the Assembly rebuffed his efforts to pass an energy package before a critical deadline passed.
Newsom’s plan mandates that the state’s oil companies create gasoline stockpiles.
California Governor Gavin Newsom plans to propose legislation requiring oil companies in the most-populous US state to amass stockpiles of gasoline and other fuels to prevent supply shortages and price spikes during refinery outages.
Such reserves would shield Californians who already pay some of the highest pump prices in the nation from the sort of run-ups seen in 2022 and 2023, said Tai Milder, a Newsom appointee who leads the state’s Division of Petroleum Market Oversight. If such a measure had been in place, it would have saved consumers as much as $650 million last year alone, he said.
The governor’s plan signals an intensification of Newsom’s long-running battle against the fossil-fuel industry and comes less than two weeks after Chevron Corp. announced plans to shift corporate headquarters to Texas after 145 years in the Golden State. In recent years, retail gasoline prices in the state surged to $6 a gallon, spikes the Newsom administration blamed on a shortage of backup supplies when refiners reduced operations to perform repairs.
“Price spikes at the pump are profit spikes for Big Oil,” Newsom said in an email. “Refiners should be required to plan ahead and backfill supplies to keep prices stable, instead of playing games to earn even more profits. By making refiners act responsibly and maintain a gas reserve, Californians would save money at the pump every year.”
Inflation is hurting the average Californian. However, gasoline is still a good value for money, especially compared to the inflation rate for food.
Newsom’s proposals will likely do nothing more than drive the closure of even more refineries and firms that support the fossil fuel industry. That may be his objective, but unless a lot more of those Generation IV nuclear reactors start appearing or lithium battery fires stop erupting, it is going to be increasingly difficult to sustain the California lifestyle that Democrats from this state tout.
The petroleum industry has pushed back, saying the mandate would hurt consumers.
The Western States Petroleum Association said the bill would punish refiners into withholding supplies and hurting consumers.
“Governor Newsom’s refinery supply mandate will create artificial shortages of fuel in California, Arizona, and Nevada by forcing refiners to withhold fuels from the market. Lawmakers who vote for this mandate will be voting to increase gas costs for their constituents,” said Catherine Reheis-Boyd, CEO of the Western States Petroleum Association.
If Newsom and the state legislature did anything to help consumers, it was surely purely coincidental.
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Aged wine is fine. Aged gasoline not so much.
CA should stick with wine.
And get it to market in skins, carried by horse and cart, if they reject fossil fuels – and, logically, things made from fossil fuels, or with the aid of fossil fuels.
Auto
Bingo. Gasoline has a very limited shelf life. It is even more limited when you consider the number of custom blends required by the state of California and the number of seasonal variations of those blends.
That’s yet another thing Newsome could do to increase supply availability. If the “California Special Blend” is scrapped in favor of what the rest of the country uses, any other refinery could produce gasoline for the state.
There’s still no way to get those other blends to California except tankers.
Gruesome Newsome is demanding the wrong thing. If he wants a steady supply of gasoline to avoid price spikes he needs to increase domestic oil availability (both offshore exploration and piped through the Mojave and SW desert) and likely double refinery capability.
This would do far more than requiring refineries to store Old Gas “Just in case”
Good point – can’t just let it sit, have to rotate old out-new in.
Actually, speaking as one who stored gasoline in 2 55 gallon drums racked above my 550 gallon diesel fuel tank on my farm, all in the tool shed for years at a time, depends on how stored. If in a large open air underground tank, yup, goes bad. If in a small otherwise sealed small tank, lasts for several years with no problems. Of course, because of all the farm small engine machinery, the gas on my farm also never contained ethanol.
We took a fuel delivery (100 gallons gas, 500 gallons diesel) about once every 3 years at our peak use. We took a 500 gallon propane delivery every other month in winter every year despite heating only with wood when there.
Oil companies, or any companies are not on call to respond to local government demands. What socialist country is Governor Gavin Newsom from … the United States of Socialist California United?
The People’s Democratic Republik of Socialist Kalifornya.
Umm.. what do you need a gasoline stockpile for when you only allow EVs ! ??
Um, “control”.
Control over those still driving an ICE (or hybrid)? Control (ration) the fuel, control the drivers …the state will be in the fuel distribution (can you say “allocation control”) business?
C’mon, there’s a very simple answer there . . . it is to insure that governmental “leaders” and bureaucrats will be able to fill up their ICE vehicles which, of course, are to be exempted from future laws that require the plebs to buy/own only EVs.
re: “it is to insure that governmental “leaders” and bureaucrats will be able to fill up their ICE vehicles”
Thread winner right here.
Stockpile to drive the generators to make electricity to charge the EVs.
But small gasoline engines have been banned in California.
It’s for The Transition.
If he wants a state stockpile, he should start building storage facilities and begin negotiations for pricing.
Anywhere safe from wildfires and earthquakes?
Or arsonists?
re: “Or arsonists?”
Just thinking out loud here – “passenger jet airliners” …
Just like the federal stockpile! BUY IT ON THE OPEN MARKET GAVIN! And then store it yourslf!
The regulatory turn where governments stop paying people to do things and just order them to do it.
Correct me if I’m wrong, but I don’t believe a “mandate” has any of the legal force of a “law” or “statute”.
If I’m wrong, then it will only be a matter of time before Gruesome Newson issues a follow-up mandate to
nationalizeCalifornialize (or is it Californicate-ize) the oil industry.Who is John Galt?
Beats me . . . and would that be John H. Galt or John M. Galt? . . . and would that be Galt born in the 1600’s or Galt born in the 1900’s? . . . and would that be John Galt born in Macedonia, or Angola or Scotland, or is it Argentina? . . . why do you ask?
… a character in Ayn Rand’s novel Atlas Shrugged (1957). Although not identified by name until the last third of the novel, he is the object of its often-repeated question “Who is . . . “
Amazon Prime Video has all 3 parts available to rent.
The only thing I didn’t care for regarding the series was that all the actors changed between Pt1 Pt2 and Pt3. The characters remained the same but every character had a different actor in each movie
OK . . . thank you . . . never knew . . . I learned something new today . . . something that is, oh, so 1960’s!
A large survey a while back, asking people only what single book had the greatest impact on their life, found Atlas Shrugged way far at the top.
The movies, as is nor uncommon for large books, leave out quite a bit.
Interesting bit of inf there.
Lucifer’s Hammer was mine, but I can see Atlas Shrugged being the top. It made an impact for me, just not as much as LH.
I googled that name and got:
Thanks!
A great book, a very long read at 1200 pages of small print but well worth the effort.
I doubt if Newsome even knows the book exists or who Ayn Rand was.
Atlas Shrugged though written in 1957 describes the socialist mind set and stage by stage route to complete collapse we see today, across the Western World. A captivating story of business leaders attempting to exist in the declining world of the constant socialist impositions. Those endless policies continuously reducing wealth, rather than increasing it.
A book the Woke would ban if they thought they could.
Try “The Fountainhead” first. Only 720 pages.
though written in 1957
Read some of her essays (“For the New Intellectual” is a good start) – she saw what was coming and warned against it. They’re almost prophetic.
Unsurprising, since she lived through a lot of it before coming to the US.
If they have even heard of it. Written before they were born. So 1960’s.
Newsom is going to have the legislature pass a law creating the mandate. All nice and legal.
More corrupt government. Newsom is one of the worst, all of California’s problems can be traced back to Newsom and people like Newsome. They are control freaks who think government is the answer when in fact government is the problem. Remove Newsom and those like him and most of your problems will disappear.
“and people like Newsome”
ie Kamala
If Gov Hairgel wanted to reduce gas prices in the Democratic People’s Republic of California, he would appoint other people to CARB than rabid greens. He might also have some doubts about “transitioning to renewables” being a practical goal. As long as Newsom is feeding imaginary goals to his green supporters, he will just jack up prices.
Not just prices, but taxes too. Wait until you see what he proposes after the national elections in November! BOHIC.
If CA idiots keep voting for him- they deserve what he gives them.
It’s what one would expect on the Left Coast
Empathy my dear JZ! I doubt that you’re voting for Maura, Pocahontas or Mahhhkey, but you keep getting them, am I right?
I never voted for any of them. I detest all of them. I’m a middle of the road guy- but I detest those idiots. Just watching Musk on Rogan- and Musk gives a good description of the crazy parts of the left coast- especially San Francisco and Portland. He points out that they’re so far to the left that to them- everyone else is far right.
This is beyond stupid — gasoline degrades over time.
They would have to maintain a constantly rotating stockpile
Fill…empty…fill…empty
Newsom needs better legal advice. The last clause of the 5th Amendment reads, ‘nor shall private property be taken for public use without just compensation’.
Gasoline produced by private refineries is private property. Forcing refinery stockpiles that cannot be sold comprises a taking. Newsom proposes to do so by fiat, without just compensation.
The 14th Amendment applied the Bill of Rights to state governments.
Snowball’s chance in hell of his proposal standing, no matter what California does.
Socialism: The state owns all property.
“Such reserves would shield Californians who already pay some of the highest pump prices in the nation….”
Doesn’t Gruesome realize that it costs a lot to maintain large reserves and that’ll it drive up costs even more?
They would need to store the fuel in a nitrogen atmosphere so it doesn’t oxidize and would need to rotate/replace the stored fuel on a monthly basis
Couldn’t they store it in unrefined form, so that it lasts longer? Maybe in the oilfields that have been quarantined from production. Hmmm. Just add up what’s already there, and they have complied.
But the stated problem is supply shortages owing to refinery outages. So, storing it unrefined doesn’t solve the problem.
No.
Didn’t Biden’s regime reduce USA’s crude oil stockpile?
Significantly. They claim it was to reduce crude prices but they also banned hydraulic fracturing on federal lands, which reduces production.
I am not sure that the State of California has the legal authority to make a private company stockpile its product. If the state wants to purchase and stockpile gasoline, it can do so.
If you leave you don’t need to stock pile. The refiners are in a little bit of a pickle also. You just can’t close up shop without having to remediate what’s underneath the refinery.
has the legal authority
Not like they care, and doesn’t seem to stop them.
It’s micro-managing and excuse preparing.
Politicians try to micro-manage because they cannot lead by principles.
I think the Goonvenor is writing an excuse for the result of his policies. When price volatility still happens he will have moved on.
I’m surprised Nevada or Arizona haven’t sued California over the commerce clause.
Take it from this old refiner, chemical engineers (that I know) do not know how to make diesel, jet and marine fuel oil in the quantities California needs to support their economy and not make gasoline in almost the same quantities as today. You might cut back on coking operations but that just replaces a portion of gasoline with asphalt.
There will be a glut of gasoline in Padd V. However, that glut has to go somewhere and the only place it can go is on a boat to China, which likely cannot support the low margins refiners “enjoy”. So, refiners will close or sell to the state.
The only way to stockpile that much gasoline is to build hundreds of tanks at $5million+ a pop. And pay refiners with tax payer dollars to dump gasoline into Asia, and somehow explain to his environmentalists supporters why he’s sending gasoline to China to get burned over there. Stockpiles aren’t stable, in this case. They grow. I guess someone should have told Newsom that California is an island when it comes to refined products.
Another supply option is to expand capacity in Texas (a lot) and build more pipelines along side the Kinder Morgan line from El Paso to Phoenix, and reverse flow of that system from LA to Phoenix. You will have to build 4 or 5 refineries, and a few very large pipelines. This would take $60 to $80 billion and at least 15 years to complete. The glut would be easier to manage on the east side of the Rockies.
Train wreck forming in Padd V. Arizona and Nevada should get their attorneys ready for a run at the Commerce Clause. Then maybe California will ease up on this silliness.
Remember. Gasoline is not his problem. Refueling jets, marine vessels, trains and semis is his problem. No gasoline, no distillates. No distillates, no trains, planes or semis. This what happens when your virtue signalling puts you way out over your skis.
BTW. Refiners won’t spend that kind of capital in a low margin business without heavy tax payer subsidies. California refiners could build lines west to east and dump the glut that will form east of the Rockies. It would be a pleasure to have California lower our gasoline prices by dumping excess barrels in our backyard.
But by law, Californians use a special blend, unique to California, that no one else wants. And it changes twice per year.
“By making refiners act responsibly…”
Newsom appears to be saying “Another decree for thee but not for me”
How about Newsom start acting responsibly… just once, before expecting others to do so.
He is as corrupt and irresponsible as they come.
maybe we could call it the “strategic reserve?”
He could as readily be talking about electricity supply under green mandates — if it were possible to “store” it in any physical and financially reasonable way.
In California, all legislation is proposed by the State Legislature.
In California, under the current legislative session, the last day to pass bills is August 31, 2024.
There will be a new legislature elected this November and a new legislative session begins in January 2025.
Newsom called a special session. Business as usual.
It’s Federal election time in Oz so naturally Danistan State wants to settle the horses for their mates in Canberra as they’re beginning to understand what woke and broke means with a bunch of lefty control freaks-
Future of gas hot water systems and heaters unclear (msn.com)
They’re having to import gas from OS now with their no local fracking/drilling elite stance whilst Oz is a net gas exporter. Votes and power always beats the great moral imperative of their times.
”Such reserves would shield Californians who already pay some of the highest pump prices in the nation from the sort of run-ups seen in 2022 and 2023, said Tai Milder, a Newsom appointee who leads the state’s Division of Petroleum Market Oversight. If such a measure had been in place, it would have saved consumers as much as $650 million last year alone, he said.“
The magical thinking of the economically illiterate. Inventory has a cost. A warehouse, or storage tank full of product, is in effect full of money. Inventory management is important to reduce costs, reduce money tied up sitting there doing nothing (money has a cost) – hence just-in-time inventory systems.
Building inventory will reduce supply of product to the market, increasing prices at the pump, added to which will be further increase to cover inventory costs.
What’s it called when government appointees plan the economic future of industry?
Stupid.
Does California have an inventory tax? If so, storage of gasoline (stockpiling) would be subject to that tax. Curious.
Strange that he should demand that when he is doing his darnedest to run them out of business.
Smart oil companies will put their California assets into separate subsidiaries and will sell them to private equity investors who will load them with debt and strip mine the assets.