California drivers — or the millions of them whose cars still run on refined petroleum — can expect to pay more to fill up their gas tanks in the coming days thanks to the partial shutdown of Valero’s Benicia refinery.
The retail cost of a gallon of gasoline in the state is expected to rise immediately, according to David Hackett, president of Stillwater Associates, a transportation energy consulting company based in Irvine.
That’s after a 12-cent spike in wholesale gas prices on Monday, Hackett said.
“That price increase is likely to get passed through to motorists over the next week or so,” he said. “You’ll start seeing prices go up starting probably today.”
The average cost of a gallon of regular unleaded gasoline in California is $3.51, 16 cents higher than a week ago, according to AAA.
Several agencies are investigating a series of petroleum coke dust releases at the Benicia refinery that began more than two weeks ago. Those releases intensified on Sunday, prompting city officials to issue a health advisory.
The Valero refinery’s flue gas scrubber malfunctioned, a problem that led to a sooty plume of petroleum coke to billow out of the facility’s smokestacks. To deal with the problem, the refinery is slowly shutting down a significant part of its operations.
Last week, problems at two other California refineries contributed to the recent jump in gas prices.
AAA says a fire at a crude processing unit at the Phillips 66 refinery in Los Angeles County and a series of flaring incidents at Chevron’s Richmond refinery drove prices higher.
AAA spokesman Michael Blasky said price spikes are the norm when refineries suffer problems that lead to curtailed production.
“When a refinery goes offline and supply drops, retailers incorporate price increases almost immediately in California,” Blasky said.
Wholesale suppliers that sell fuel to gas stations and hear about the Benicia refinery’s shutdown will probably go into the so-called spot market to buy gas, sending the price up, Hackett said.
The refinery problems come amid a jump in the price of crude oil over the last year, which has sent gas prices up nationally.
California attorney general subpoenas refiners on gas prices
Associated Press, Updated 2:57 pm, Friday, July 1, 2016
The California attorney general has issued subpoenas to several oil refiners to learn how they set gasoline prices, which are consistently higher in California than in most other states.
Chevron Corp., Exxon Mobil Corp., Valero Energy Corp. and Tesoro Corp. confirmed on Thursday that they have received subpoenas in recent weeks.
The attorney general is making a sweeping request for information about gasoline supplies, pricing, and maintenance shutdowns that can temporarily create shortages and increase prices, according to people familiar with the investigation. The people spoke on condition of anonymity because they were not authorized to discuss details of the subpoenas.
The requests came from Attorney General Kamala Harris, a Democrat who is running for the U.S. Senate. Kristin Ford, a spokeswoman for Harris, declined to comment on whether her office was investigating.
Chevron spokesman Braden Reddall said the company received a subpoena from the attorney general’s office and would cooperate with the investigation.
Valero received a subpoena “and we will respond accordingly,” said spokeswoman Lillian Riojas.
Spokesmen for Exxon and Tesoro also confirmed the requests for information. None of the companies would discuss the matter further.
California perennially has among the nation’s highest prices for gasoline. This week, the average for a gallon of regular was $2.90 in the state compared with the national average of $2.29, according to the AAA auto club.
Some consumer advocates have charged that refiners drive prices higher by tactics such as frequent or overly long plant shutdowns.
Refineries are routinely taken offline for maintenance, and there have been longer-lasting outages after disasters such as the explosion in February 2015 at an Exxon refinery in Torrance, near Los Angeles.
Gordon Schremp, senior fuels specialist with the California Energy Commission, said 2015 saw an “extraordinary price spike in magnitude and duration in California,” which a commission advisory committee has been investigating.
“We are aware that they were doing this,” Schremp said of the attorney general’s investigation, “because off and on they’ve talked to us about what was going on with the 2015 market, important factors that can cause spikes in the markets.”
Industry officials blame high prices on California’s stricter clean-air requirements, which they say add costs and make it more difficult to import gasoline from other states when there is a price spike.
Rebecca Adler, a spokeswoman for the American Fuel & Petrochemical Manufacturers, called the allegations in the subpoenas baseless.
“We are confident that nothing will come of this,” she said.
The group Consumer Watchdog has repeatedly called on Harris to investigate oil companies over California gas prices and welcomed news of the investigation.
“It’s great that we have a law enforcement official asking questions about both supplying the market and equitable pricing within the market,” said the group’s president, Jamie Court.
Bernie Sanders Announces Plan to Strangle the Booming Fossil Fuel Industry in America
By Michael Hausam, November 5, 2015
The just-introduced “Keep It In the Ground Act,” co-sponsored by Bernie Sanders, would halt new oil and gas exploration on federal lands and offshore waters. It also would terminate any existing leases that aren’t currently producing.
The bill is also sponsored by Senators Barbara Boxer (D-CA), Ben Cardin (D-MD), Kirstin Gillibrand (D-NY), Patrick Leahy (D-VT), and Elizabeth Warren (D-MA).
In an announcement at the Capitol in D.C., Sanders said that the end result of the legislation would be to make sure that:
“over 90 percent of the potential carbon emissions from oil, gas and coal on our federal lands and federal waters (would stay) underground forever.”
The motivation for the bill is to combat climate change. In Sanders’ statement at the rally, he took a shot at his Republican opponents, whom he characterized as deniers:
“But somehow — somehow! — when it comes to climate change there are massive attacks on scientists who tell us the truth about climate change. Worry less about your campaign contributions, worry more about your children and grandchildren. The debate is over.”
Of course, this bill only addresses the supply side of fossil fuels and does nothing about addressing the demand for oil and gas – other than via necessarily driving up the costs of gasoline, electricity, and others that depend on their availability.
Stopping the availability of using federal lands for fossil fuels is a key priority for the anti-fossil fuels movement.
With roughly half of the remaining unexploited fossil fuels in the U.S. being on those lands, according to Grist, the jobs and fuels from this battle will make a huge difference for groups warning about global warming, as well as people who care about cheap fuel for economic growth and prosperity.
California regulators restore emissions-cutting fuel rule
By Judy Lin, Sep. 25, 2015 5:49 PM EDT
SACRAMENTO, Calif. (AP) — California regulators on Friday restored ambitious rules to cut transportation fuel emissions 10 percent within 5 years, a decision that gives Gov. Jerry Brown a boost for his climate change agenda.
The rules further strengthen California’s toughest-in-the-nation carbon emissions standards, but oil producers warn the changes could drive up costs for consumers at the gas pump.
The changes are expected to add a few cents a gallon to the cost of gasoline and diesel fuel in the state that already has some of the highest gas prices in the nation. The state estimates a typical commuter will pay an extra $20 to $24 in 2017, increasing to $52 to $56 in 2020.
“We are on a path to reduce our dependence on petroleum and this program is a key piece of that action,” Mary Nichols, chairwoman of the California Air Resources Board, said ahead of the vote.
Brown, a Democrat, has vowed to intensify his fight against climate change after the oil lobby helped kill a Democratic legislative proposal earlier this month to slash statewide petroleum use by half in 15 years. The board is the state’s top regulatory agency to enforce rules aimed at reducing air pollution.
Regulators voted 9-0 to re-adopt its low-carbon fuel standard, which requires producers to cut the carbon content of fuels 10 percent by 2020 to help the state meet its emission-reductions goals.
The program was initially adopted in 2009 but the reduction target has been frozen at 1 percent because of a court fight. Friday’s vote allows the state to resume its program; modifies rules in response to industry concerns about price spikes; and gives companies more credits for using renewable hydrogen and other investments to reduce pollutants.
Supporters say the program is worthwhile because it will encourage greater use of cleaner biofuels and electric vehicles, which can be cheaper to operate than those powered by gasoline or diesel.
“This puts it back on track,” Bill Magavern, policy director at Coalition for Clean Air, an environmental advocacy group, said after the vote. “We have other programs that address vehicle technologies and vehicle miles traveled, and this is the one that tells oil companies to reduce the carbon intensity of their fuels.”
Oil producers counter that the rules are unworkable and too costly. They said the standard will impact consumers as the companies try to comply with the mandate or face being shut out of the market.
Catherine Reheis-Boyd, president of the Western States Petroleum Association, which represents oil companies, said the low carbon fuel standard jeopardizes the state’s energy future and adds uncertainty.
“California motorists need to know what is coming and how these regulations will impact transportation fuels,” Reheis-Boyd said in a statement.
Unlike other rules the state has adopted requiring cleaner-burning fuel or more fuel-efficient vehicles, the standard, first proposed in a 2007 executive order from then-Gov. Arnold Schwarzenegger, calls for counting all the pollution required to deliver gasoline, diesel or alternative fuels to in-state consumers — from drilling a new oil well or planting corn to delivering it to gas stations.
In addition to tailpipe emissions, it includes factors such as whether an ethanol factory uses coal or natural gas to power production or an oil rig uses diesel fuel to drill.
Regulators are targeting transportation fuels because California’s roughly 30 million vehicles account for about 40 percent of the state’s emissions — the largest source. The rest comes from generating electricity and industrial manufacturing, as well as commercial, residential and agricultural uses.
All fuels are measured against a baseline pollution standard. If a fuel falls above or below the baseline, it generates a credit or deficit that other producers can buy and sell to meet the target.
It’s up to fuel producers to figure out how to meet the goal, whether by changing production methods, using ethanol or electric vehicles for transportation or buying credits on the market.
After the rule’s initial adoption, out-of-state refiners and ethanol companies were among those who sued, arguing that transporting the fuels into California alone made them less competitive against in-state producers. They argued the law unconstitutionally limits interstate commerce.
The U.S. Supreme Court let stand a 2013 appeals court decision upholding the fuel standard.
Opponents continue to challenge the state’s authority to regulate out-of-state production. Oil firms are also trying to block a similar standard enacted in Oregon, the only other state with a clean fuel standard.
Friday’s move to restore California’s program is not related to Volkswagen drawing international attention for violating separate federal and state rules that regulate emissions from vehicles.