The company says it may quit refining oil in the state unless officials roll back taxes and regulations.
California, the most populous US state, is highly exposed to the disruption rippling across commodity markets because it imports about 20% of its refined fuels from Asia.Now shipments from China, South Korea, Singapore and elsewhere are at risk of slowing significantly as Iran blocks the Strait of Hormuz, leaving Asian nations struggling to meet their own demand at home.
Chevron’s oil refining head Andy Walz said the potential for fuel shortages in California is his “worst fear.” “We have refineries in Asia that are having to cut crude, and so they’re going to make less products,” Walz said in an interview Tuesday. “What if San Francisco doesn’t have the jet fuel it needs? Or Los Angeles? Or maybe gasoline?”Changes to California’s Cap-and-Invest program are freaking out refiners … and a few DemocratsGas and oil prices jump as strikes on Persian Gulf facilities escalateCalifornia is disconnected from the US fuel-making centers of Texas and Louisiana, essentially making it an energy island. That’s compounded by multiple refinery closures in recent years due to increased costs driven by regulations designed to fight climate change and cap oil industry profits. As a result, California consumers are more exposed than most other Americans to surging energy prices because of the Iran war. They already pay nearly $6 for a gallon of gasoline, compared with a national average of close to $4. It’s a growing political problem for Governor Gavin Newsom, a Democrat who is expected to run for president in 2028. “California has decided that they’re going to rely on imports,” Walz said at the CERAWeek by S&P Global conference in Houston. “It’s a dangerous game.” California officials should declare an “energy emergency,” reform its climate and tax rules and promote in-state oil production, Walz said. Without such action, Chevron could quit refining in California within a decade, he said. A spokesman for Newsom’s office said oil companies are “cashing in” on the war in Iran and running a “coordinated campaign” to attack California. “If they’re serious about protecting consumers, they should direct that concern where it belongs: at Donald Trump. There’s no end in sight to Trump’s war taxing American families at the pump,” the spokesman, Anthony Martinez, said in an email. The Trump administration has already used emergency wartime powers to authorize Sable Offshore Corp., a Houston-based driller, to restart oil production off the California coast. The president has also temporarily waived a century-old maritime law called the Jones Act to help make it cheaper and easier to ship gasoline, diesel and other commodities between US ports.The state already has the nation’s toughest fuel standards as well as a carbon cap-and-trade program that critics say forces consumers to pay the highest prices in the nation. Its goal to reduce carbon emissions 85% by 2045 relies heavily on a near-complete phaseout of gasoline-powered cars and a large reduction in heavy industry — including refining. Nonetheless, California remains the country’s second-largest consumer of gasoline and the largest market for jet fuel, for which there’s currently no practical low-carbon alternative. “The California intent to offshore carbon to other nations has offshored their security of supply,” Walz said. “They’ve offshored jobs and they haven’t had any impact on carbon.” Chevron, which has tankers sitting idle on each side of the Strait of Hormuz, is taking the unusual step of shipping Gulf Coast oil to California through the Panama Canal as the war disrupts shipments from the region that West Coast refiners typically use, Walz said. China has already imposed a fuel export ban as shipments from the Gulf dwindle. If the Strait of Hormuz remains blocked long enough, other Asian countries could follow suit. Chevron’s scenario planning initially looked at the Strait being closed until the end of March. “Now our scenario plans are worse,” Walz said. “It’s going to be longer and we’re trying to look around the corner.” California is home to more than 30 military bases. That includes one of the largest in the US, Travis Air Force Base, which Chevron supplies from its Richmond refinery.New emissions rules proposed by the California Air Resources Board, if implemented, threaten to drive costs for the state’s remaining refineries even higher. Chevron estimates the additional expenses could hit $500 million within five years. “They need to abandon the tax on refineries or they won’t have any refineries in 10 years,” Walz said. “If it stays that way — Chevron will be gone in 10 years for sure. We won’t be able to make it.”Review: Famed classic rock act showcases new lead singer in concertHarriette Cole: Should I ask the bride why she's billing her wedding guests?Canceled USC debate could reshape governor’s race after backlash over exclusions, experts say'Prolific' 64-year-old Oakland drug dealer sentenced to 7 years in federal prisonKurtenbach: Moses Moody's cruel injury proves it — the Warriors' season is truly cursed
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