The California Democrats’ oil strategy is a big bust. We need a home-grown solution | Opinion

Well, that didn’t take long.

On Oct. 14, Governor Newsom signed special session legislation to “prevent gas price spikes and save consumers money at the pump” by requiring refineries to expand the amount of gasoline they hold in reserve.

I, along with fellow Republicans in the California Legislature, are increasingly worried about the bill’s million-dollar-a-day penalties and language making it all but impossible to build additional storage. The flaws in the governor’s strategy mean these mandates will ultimately be passed on to the consumer through higher gasoline prices.

Before the bill was signed, refinery operators warned that investment would flee the state as refineries will become difficult to operate without a loss.

Nevertheless, the majority party in Sacramento, cheered on by Newsom, did not heed the warnings and signed the legislation into law.

Two days later, the concerns that my colleagues and I spoke about in opposition became reality as Philips 66 announced that it will close its Los Angeles-area refinery in 2025.

The company’s announcement was due to uncertainty over “the long-term sustainability of our Los Angeles refinery” because of “market dynamics” – a dramatic reminder that heavy-handed policies made in Sacramento have real-world impacts.

This is especially true to the 600 workers who will be out of a job next year.

Many people many not realize that the gasoline policies enacted in California also impact consumers in Nevada and Arizona.

California refineries provide more than 80% of Nevada’s gasoline supply, and more than a third of Arizona’s gasoline supply.

California’s costly regulations drive up the price of gasoline for our neighbors as well. Gasoline is cheaper there mostly because of lower taxes and a less expensive blend of gasoline that refiners send to those states.

Any disruption in our gasoline supply has a ripple effect on our neighboring states. This is why the governors of those two states expressed concern with the bill.

At this point, if you are the leaders of Arizona or Nevada, why would you want to do business with California at all? It makes more strategic sense for those states to look to the Gulf States like Texas for reliable, affordable, gasoline.

A lot of people, including myself, warned Newsom that his legislation would have consequences. But he and the majority party were hell-bent on passing a bill to target the refineries over unproven accusations of price gouging.

If refineries continue to close, our gasoline demand will have to be met by expanding imports, which practically means bringing fuel into our ports on more polluting tanker ships.

There are only a handful of refineries in the world that can produce the special blend of gasoline that California requires and they may soon have a tremendous amount of leverage over California.

Our government must begin to prioritize our energy security, or there may come a day soon that we will regret it.

We must expand domestic drilling in California. It makes no sense to have oil tanker ships travel thousands of miles to California’s harbors to deliver oil to our refineries when we can produce that oil here at home.

Shipping all that oil adds $5 to $6 to the price of a barrel of oil — that’s about thirty cents on each gallon of gasoline.

We should be working with our neighboring states and helping our refineries expand supply capacity instead of penalizing them.

Let’s allow our domestic energy producers to meet California’s need for oil and gasoline and we can lower the cost while providing good paying jobs for California’s families.

This story was originally published October 24, 2024 at 5:00 AM with the headline "The California Democrats’ oil strategy is a big bust. We need a home-grown solution | Opinion."