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California refinery closures raise concerns
The escalating conflict in Iran along with another California refinery set to close, are raising concerns that the state's high gas prices could climb even higher.
LOS ANGELES - The escalating conflict in Iran along with another California refinery set to close, are raising concerns that the state's high gas prices could climb even higher.
Right now the average price for gas in California is $4.81, according to AAA.
"California is certainly already strained and the war could not come at a worse time for California gas prices," said Alex Jacquez, Chief of Policy & Advocacy for Groundwork Collaborative.
Economists and policy experts say while the war in Iran is driving up gas prices across the country, California faces added pressure with refinery closures threatening to drive up prices even more as the state's refinery capacity shrinks.
California refineries closing
Dig deeper:
Phillips 66's Los Angeles refinery announced its closure last year. Valero's Oil refinery in Benicia is set to close in April.
"We need a rational conversation, we need lawmakers to understand the consequences," said Andy Walz, Chevron President, Downstream, Midstream and Chemicals.
Chevron, which operates several refineries in California, including one in El Segundo, is sounding the alarm on the state's energy policies.
What they're saying:
Walz says he sent a letter to lawmakers and state agencies this week claiming new, proposed regulations from the California Air Resources Board could be detrimental.
"The laws and proposals that CARB is thinking about is going to make it a lot worse, its going to drive the price of gasoline up to consumers and it's going to drive refineries out of the state."
Chevron executives say California, especially with the ongoing conflict in Iran, cannot afford to lose more refineries.
RELATED: Iran War sends gas prices jumping across Southern California
"El Segundo supplies 40 percent of the jet fuel to LAX," said Walz. "We supply about 20 to 25 percent of the gasoline of the motorists in the LA basin, so a very important piece of infrastructure."
Consumers feeling the pain at the pump
When it comes to gas prices, policy experts say hopefully the conflict in Iran wraps up before another refinery closes in April.
"It really does not seem like there is a handle on how long this conflict could go and every single day we are seeing those oil prices go higher, we're seeing the market sell off even more and more uncertainty about how we find an end to the war," said Jacquez.
California Energy Commission statement
A spokesperson for the California Energy Commission released the following statement:
"As a result of last weekend’s military actions in the Middle East, the cost of crude spiked and consumers nationwide are feeling it at the pump. The national average price per gallon at the pump has risen 27 cents since last week, according to AAA, versus 17 cents in California."
"California has been importing crude oil for decades and then refining it in state to produce our special blend of gasoline (CARBOB), jet fuel, diesel, and other products. As California refining capacity decreases over time, the state will import less crude and more refined oil products, which refiners around the world now produce to meet cleaner burning fuel standards in California and elsewhere. Overall demand for oil will decline as the transportation sector shifts to electricity and other clean, alternative fuels."
California Air Resources Board statement
Meanwhile, the California Air Resources Board released a statement saying, "The Cap-and-Invest Program is the most cost-effective way for California to achieve its statutorily mandated climate goals. We are currently accepting public comment on the proposed amendments through March 9.
The current staff proposal follows legislative direction under AB 1207 and maintains the status quo for the industrial sector which refineries are part of. This includes maintaining allowance allocation levels and other program flexibilities that support doing business in California and help ensure liquid fuel supply remains reliable, affordable, and resilient throughout the transition to carbon neutrality.
We continue to meet with regulated entities to make sure we fully understand implications of the proposed amendments. Staff will present the proposal for consideration by the CARB Board at a public hearing at the end of May. As we hear from the public, affected industries and our partners in the Legislature, we have included time to make adjustments to the draft proposal prior to Board consideration.
In being responsive to legislative direction and considering affordability, it’s important to note that the proposal is $20 billion less costly than the scenarios initially analyzed in April 2024.
The proposal delivers significant return on investment including:
- Total statewide benefits of $180.7 billion, including $123 billion in avoided health costs resulting from improved local air quality, and
- Up to $485 billion in global savings due to avoided climate damages
The program is also projected to generate:
$56 billion to benefit utility ratepayers, and
$37 billion for climate investments
The proposal builds on the success of the 13-year program which yields a 100% compliance rate and has delivered significant measurable benefits for California including:
- Helping the state meet its 2020 climate target six years early while growing the economy.
- Generating $34 billion for climate investments, funding 500,000+ projects and supporting 30,000 jobs.
- Directing 70% of investments to disadvantaged and low-income communities.
- Returning $15 billion in bill credits to household utility customers.
The Source: Information for this story came from interviews with Alex Jacquez, Chief of Policy & Advocacy for Groundwork Collaborative and Andy Walz, Chevron President, Downstream, Midstream and Chemicals. Statements were also issued by the California Energy Commission and the California Air Resources Board.