In an interview with Politico, California’s “Oil Czar” Tai Milder stated that he “isn’t sweating this refinery closure.” He cited the profitability of the state’s market for refiners.
Milder’s optimism may be misplaced, as this closure marks another setback for California’s already strained energy supply. California's strict regulatory landscape has driven domestic oil companies out of state, leading to a reliance on foreign oil imports that now account for over 76% of the state’s oil usage. This dependency costs California $25 billion annually – money that could otherwise help local infrastructure, education, and economic growth.
Despite Milder’s assertion that Phillips 66’s closure won’t affect supply, with fewer refineries there’s an increased risk of price volatility, higher gas prices, and even potential shortages, none of which are good options for Californians.
When asked about California's transportation fuels report showing barely enough refining capacity to meet California’s needs, Milder suggested we could get the fuels elsewhere.
“My understanding is that they have a refinery in Ferndale, Washington, that is capable of producing CARBOB. I also believe they have refinery assets in the Gulf, and so I think there’s a mix of other U.S.-based refineries, as well as international refineries that they could use to source these materials. Also they can get blending components and use physical assets they already have to blend CARBOB. They can take these different components from different sources and blend it into CARBOB here in California with a refinery.”
Milder's confidence in alternative supply options from Washington and Gulf Coast refineries raises logistical questions, as transporting refined gasoline across state lines or oceans isn’t always viable or cost-effective.
To make matters worse, Valero also hinted this past week that it is considering a range of options, including selling its two California refineries, due to growing regulatory pressure in the state.