By Mike Aldax
A six-month investigation by CBS News California confirms that state policy, and not price gouging, is the primary reason California has the highest gas prices in the nation.
While some state leaders previously blamed oil companies to justify placing caps on their profits, the CBS News investigation found that officials now admit there is no evidence that companies unfairly raised prices. Instead, the report shows that more than half of the cost of a gallon of gas comes from California’s own requirements.
“Higher taxes, labor and business costs, combined with environmental programs, regulations, and the state’s unique fuel blend, drive up baseline prices,” the probe found.
New regulations caused the recent closures to refineries in Benicia and Wilmington, cutting California’s fuel production by nearly 20 percent. The Benicia closure alone will cost hundreds of high-paying jobs and is already straining the local fuel supply.
California is now more reliant on importing its unique gasoline blend from Asian refineries, which operate under less strict environmental standards. Shipping this fuel halfway around the world takes weeks and creates supply volatility, risking price spikes during global shortages or local outages.
California State Natural Resources Secretary Wade Crowfoot cautioned about the environmental impact of imported fuel, stating, “There is less pollution associated with the gasoline that’s produced in California.”
Chevron Richmond public affairs representative Brian Hubinger notes that the Richmond Refinery invested billions of dollars in infrastructure to produce fuel that meets California’s strict environmental standards.
But future policies, such as proposed “cap and invest” regulations, are expected to further disadvantage local refineries. These mandates favor out-of-state and overseas suppliers that are not required to follow California’s strict environmental rules or pay local taxes.
As the city’s largest taxpayer and employer, Chevron Richmond is integral to the local economy. However, as officials push to move away from fossil fuels despite a high demand for energy, it is becoming harder for companies to justify spending more money on their California operations.
“It costs us hundreds of millions a year just to stay in business,” Chevron Richmond Refinery Director Tolly Graves said. “Things have to change for us to be willing to invest in a refinery in California.”
Read the full report from the CBS News California investigation at this link.
