Democrats have managed to run the most populous state with the country’s biggest economy into the ground and from what I see, they show no signs of finishing California off for generations to come. The latest nightmarish move: Squeezing the life out of what remains of the state’s energy-producing sector.
California has a cap-and-trade system in place, which essentially acts as an additional tax on energy producers. This program has been repeatedly extended whenever it approaches its expiration date. Originally set to expire in 2030, it was extended last year by Democrats for another 15 years, pushing the expiration to 2045. Additionally, the California Air Resources Board is about to vote on changes to the program that could further increase costs for energy producers, often referred to as “polluters,” operating in the state.
This week, Chevron sent a letter to Governor Newsom warning that if the new changes are approved, gas prices will increase, and the survival of California’s remaining refineries will be at risk. Currently, there are only seven refineries left in California, with five others having closed in recent years:
Chevron just sent a letter to California Governor Gavin Newsom and the California Air Resources Board warning them of deep concerns and strong opposition to the CARB- proposed amendments to the Cap-and-Invest (formerly cap and trade) regulation, that the state’s few remaining refineries can’t survive, and the California economy could be crippled.
“The proposed regulation will cripple the survivability of the state’s remaining refineries, which will result in California losing the entire industry to this misguided program. This regulation will increase transportation and aviation fuel prices for consumers. It will risk significant job losses, including many high-paying union jobs, while reducing funding for essential public services. It will upend California’s fuels market and threaten critical energy and national security assets.”
In the letter, Chevron President Andy Walz cautions that the price of gasoline will increase by more than a dollar a gallon by 2030 as a result of this regulatory change, as well as 536,770 petroleum industry jobs could be lost in the state if CARB’s proposal is authorized.
Walz continues:
The California energy industry’s economic, industrial, environmental, and national security benefits have been the foundation of a healthy, prosperous state and nation. Adversarial policies at local, regional and state levels have eroded that foundation. These proposed regulatory changes threaten to destroy it. Chevron urges policymakers and regulators to reconsider and revise the proposed regulation before it causes lasting and irreversible harm to California’s economy and energy security and broader vital American interests.
The complete letter anticipates that by 2030, the cost of the cap-and-trade tax will increase gas prices by $1.21 per gallon. In an interview with a local news outlet, Chevron Division President Andy Walz expressed concern that his company and others won’t survive, at least in California:
In an interview with KCRA 3 on Thursday, Chevron’s President of Downstream, Midstream and Chemicals Division Andy Walz said the proposal ends up basically adding billions in costs to companies refining and producing fuel in-state. He said companies importing fuel from other countries would avoid the added costs.
“I know Chevron and my competitors are having trouble running a business in the state of California. If they add this burden of a tax on our refineries, I think it’s a matter of time. It’s not whether or not they’ll close, it’s when,” Walz said in the interview with KCRA 3.
When asked if Chevron is threatening to leave the state, Walz said the company has not yet made a decision. Walz said state leaders must get in front of the issue.
“I am extremely worried. I do think we have an emergency in the state of California. I think lawmakers need to take this seriously,” Walz said.
PBF Energy, another major player in California, recently sent a letter to the state highlighting concerns similar to those raised by others in the industry. As owners of two out of the last seven refineries in the state, PBF noted that while domestic companies are subject to the cap-and-trade tax, their overseas counterparts are not:
The status quo of the C&I program will severely undermine the viability of in-state refining, with potentially devastating consequences for California’s fuel supply, economy, and workers. The Proposed Amendments will make the situation exponentially worse by increasing in-state refiners’ stationary payments. Before finalizing the proposed rule, we urge CARB to address the state’s gasoline supply-demand imbalance by revising the current C&I payment schedule and Proposed Amendments to put in-state refiners on equal regulatory footing with fuel importers.
Like Chevron, PBF is warning that the new regs will make doing business in the state impossible, per the letter:
The existing C&I regulations and Proposed Amendments will effectively drive in-state refiners out of business while importers are completely shielded from these costs. This is the central flaw in the current stationary source program. The Proposed Amendments as written will only exacerbate the cost imbalance between California’s refiners and importers.
If in-state refining becomes significantly impaired or infeasible, the catastrophe will go well beyond gasoline supply for consumers by also affecting military bases, jet fuel for California’s airports, marine fuel for ports, plus crude oil production in the Central Valley, all of which would impact thousands of direct and indirect jobs throughout the state.
Here’s the issue. California is facing a serious financial crisis, with projections showing an $18 billion budget shortfall next year, followed by an even larger deficit the year after. This dire situation has prompted state officials to seek additional funds from energy producers and wealthy individuals. Democrats seem willing to risk jeopardizing the state’s economy and businesses because cutting spending is simply not an option they ever want to consider.
However, the long-term consequences could be quite detrimental. California already has one of the highest costs of living in the nation, second only to Hawaii. By targeting billionaires for higher taxes and raising gas prices by a dollar, the overall cost of goods and services is bound to rise. At some point, these soaring prices may prompt more residents to rethink their choice of living here, which doesn’t bode well for the state’s future.