Russia. China. Venezuela. Iran. More than a dozen countries make essence in public refineries.
Could California be the next on the list?
Californian decision -makers are considering ownership of the state of one or more oil refineries, an element on a list of options presented by California Energy Commission to ensure regular gas supplies as oil companies withdraw from the ‘Refinery activity in the state.
“The State recognizes that they are on the way to more refineries closings,” said Skip York, chief energy strategist at the energy consultant Turner Mason & Co. Consumer demand, leading to shortages fuel, higher prices and serious logistical challenges.
Fuel demand drops to California, although slowly, for two reasons: more effective petrol engines and the growing number of electric vehicles on the road. Fuel consumption in California culminated in 2005 and dropped by 15% until 2023, according to the union of scientists concerned.
Electric vehicles, including rechargeable hybrids, now represent around 25% of annual sales of new cars. According to the mandate of the State, the new sales of petrol cars and light trucks will be prohibited from the 2035 model year.
The drop in demand leads to fundamental strategic changes among the main oil refiners in the state: Chevron, Marathon, Phillips 66, PBF Energy and Valero.
Already, two California refineries have ceased to produce gasoline to make biodiesel fuel for use in heavy trucks, a more specific to fuel alternative which benefits from rich state subsidies. More worrying, the Phillips 66 refinery complex in Wilmington, just outside Los Angeles, plans to close permanently at the end of the year.
This leaves eight major refineries in California capable of producing essence. The closure of anyone would create serious fuel supply problems, according to industry analysts. But Chevron and Valero envisage the closings of permanent refineries.
The implications? “The demand will gradually decrease,” said York, “but the supply will fall into pieces.” What is unknown is how many refineries will close, and how long, and how it will affect supply and demand.
This puts the state in a difficult position, according to York. “Even if you had perfect foresight, it would be difficult to make the right time.”
A takeover of the state refinery seems to be a radical idea, but the fact that it is considered to be the severity of the supply problem.
This is one of the many options presented by California Energy Commission, which makes a legislative order to find means to ensure “a reliable offer of affordable and safe transport fuel in California”.
The list of options is disparate: shipped in more Asian essence; regulate refineries on the order of electrical public services; Ceiling beneficiary margin; And many others.
The list was to be transformed into an official transition plan before December 31, 2024, but six weeks later, no plan was issued. Therefore, it is not yet clear what will be the state’s response if another refinery announces a closure this year or next year.
California is known as a “petrol island” devoid of the type of logistics network with several states across most of the continental United States which can help to mitigate the shocks of the offer. There are no pipelines to supply essence in other states. The ocean expeditions of states rich in Gulf refinery are limited by an archaic federal law known as Jones Act. Fuel imports represent only 8% of supply to California. The remaining 92% is almost all produced in California refineries.
To complicate the questions: special petrol mixtures required in California. These required formulations have greatly contributed to reducing air pollution. But they also increase petrol prices and increase the risk of shortages, because little gasoline is produced outside California.
Western stroleum strokes Assn. Lobby Group warns that state participation in the property or management of the refinery would be difficult.
“This is a very complex and difficult to manage company,” the group said in a statement. “There are commercial obstacles and technical obstacles that have a complete and holistic understanding of industry, and how it works.”
Asked about the potential of public refineries, the Governor’s office Gavin Newsom referred questions to the State Energy Commission, but has published a statement saying that California is “engaged in significant and thoughtful political work for successfully manage our transition far from fossil fuels during the next 20 years, not overnight. »»
In a press release, the Energy Commission has recognized that there are “many challenges to be overcome” by a public refinery, “including the high purchase and exploitation cost, labor and workforce The qualified expertise necessary to manage refinery operations and how the refinery adapts to the transition of the State far from oil fuels. »»
James Gallagher, the republican chief of the Yuba City assembly, says that California does not move quickly enough to deal with potential petrol shortages.
“We are starting to lose refineries because we have made so expensive and impossible to operate in California,” he said. “Now, after we have chased them away, we are talking about taking them back to make sure there are foods. We are heading to price controls and the government’s buy -back of industries. It has never worked very well in the history of the world. »»
The head of the minorities of the State Senate, Brian Jones (R-santee), agreed: “The state has nothing to do in the oil refinery,” he said.
Their Democratic counterparts, the president of the Assembly Robert Rivas (D-Hollister) and the head of the majority of the Senate, the president of the Mike McGuire (D-Sonoma), refused to be interviewed.
Talking about new closures of refineries over the next two years is reheating. During a conference call with investors last year, shortly after the announcement of Phillips 66, the CEO of Valero, Lane Riggs, responded to the concerns concerning the closure of one or the other of his Two California refineries.
“All the options are on the table,” he said. “Obviously, the regulatory environment of California exerts pressure on operators and how they could think of going ahead with their operations.”
Chevron, a Californian company since 1879, announced last year that it moved its headquarters to Texas. The company has planned to stop production in one or two of its California refineries, recently reported the Wall Street Journal, which Chevron confirmed in a declaration to the Times.
“Recent Californian policies, such as the prohibition of the sale of new internal combustion engine vehicles by 2035, the taxation / potential penalty on the profits of the refinery and the new potential minimum storage require From our company and erode our confidence in the future, “Andy Walz, the president of Chevron downstream, Midstream and Chemicals, said in the press release.
Jones said that even if it was not sure that the public refinery option is a serious proposal, it appears on the list of options and that the imminent supply problem is real. “I’m not sure that all Californians have seized the imminent emergency of the situation,” he said.
“I think what we probably need is to build another refinery here in the state,” said Jones. Otherwise, when refineries close, the demand for petrol should be satisfied by petrol imports, mainly by ship, Asian.
“People panic on the environmental impacts of crude oil expeditions,” said Jones. “But no one scares the environmental impacts of petrol imports.”
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