Tag Archives: Western States Petroleum Association (WSPA)

California oil industry, Cap-and-trade, Gasoline tax, Oil oligopoly, Oil prices

California oil: Refinery profit margins rise during price spikes

May 5, 2015 Roger Straw

Repost from The San Francisco Chronicle
[Editor: Significant quote: “A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime.” – RS]

Refinery ills push price of gasoline up sharply

Higher crude costs add to spike at pump

By David R. Baker, 4 May 2015, 7:23 pm

The ExxonMobil refinery is seen after an explosion in a gasoline processing unit at the facility, in Torrance, Calif., on Wednesday, Feb. 18, 2015. Two workers suffered minor injuries and a small fire at the unit was quickly put out. The incident triggered a safety flare to burn off flammable substances. The facility about 20 miles south of downtown Los Angeles covers 750 acres, employs over a thousand people, and processes an average of 155,000 barrels of crude oil per day, according to the company. (AP Photo/Nick Ut) Photo: Nick Ut, Associated Press

California’s gasoline prices jumped 31 cents in the last week, pushed higher by rising crude oil costs and problems at several state refineries.

It’s the second time this year that California drivers have faced such a steep price spike. And it has some oil company critics livid at a state gasoline market they say is designed to fail.

“This is a problem that only benefits them, to the expense of California consumers,” said Tom Steyer, the billionaire environmental activist who has pushed to raise the oil industry’s taxes in the state. “When you look at an oligopoly, is there anyone there with an incentive to solve this problem? I would say no.”

The average cost of a gallon of regular in California hit $ 3.71 on Monday, according to GasBuddy.com. Less than a month ago, in mid- April, regular was selling for less than $ 3.10.

And while gas prices have been moving higher nationwide, California has by far the nation’s priciest fuel. Even Hawaii currently pays less, with an average of $ 3.20. The national average stands at $ 2.63, according to GasBuddy.com.

Part of the problem lies in crude oil prices, which have risen 34 percent since mid-March. But California’s sudden price surge also reflects unique aspects of the state’s gasoline market that have frustrated drivers for more than a decade.

California uses its own pollution-fighting fuel blends not found in other states. As a result, most of California’s gasoline is made by 14 refineries located within the state’s borders. The state also has some of the country’s highest gasoline taxes — almost 66 cents per gallon. And starting in January, California’s cap-and-trade system for reining in greenhouse gas emissions added 10 cents to the overall cost, according to estimates.

Since only a limited number of refineries make California grade gasoline, any hiccup in production can move prices. In February, Tesoro temporarily shut down its Martinez refinery in response to a labor strike, and an explosion hobbled Exxon Mobil’s refinery in Torrance ( Los Angeles County). Prices soared for four weeks.

Analysts blame the current spike on production glitches at the Tesoro refinery in Martinez and the Chevron refinery in Richmond, which suffered a flaring incident on April 21.

In addition, the Oil Price Information Service reported last week that Chevron took down a key unit at its El Segundo ( Los Angeles County) refinery for maintenance, prompting the company to buy up extra gasoline supplies on the wholesale “spot” market to fulfill its contracts to fuel distributors. A Chevron spokesman declined to comment on the El Segundo refinery.

The price spike may be easing, with the statewide average rising just 1 cent overnight from Sunday to Monday. Wholesale prices are already started to fall.

Consumer advocates have long argued that the oil companies benefit from keeping gasoline supplies tight in California, with too little fuel held in storage for when the next refinery breakdown strikes.

A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime. Soaring retail prices more than make up for the added expense of buying extra supplies, said Jamie Court, the group’s president.

“The oil companies know that even if it’s their refinery that’s knocked out, the higher prices will more than compensate them,” he said.

Court wants the state to require oil companies to maintain a specific amount of fuel in storage, to prevent or at least lessen future price spikes.

The U. S. Department of Energy is studying the idea of a fuel “reserve” on the West Coast — similar to the nation’s Strategic Petroleum Reserve — but has framed it as a way to prevent supply disruptions after natural disasters, such as earthquakes or tsunamis. Tupper Hull, spokesman for the Western States Petroleum Association, said California officials have considered the idea before — and rejected it as unworkable.

“Intuitively, setting aside large volumes of fuel from the market is not going to help,” Hull said.

Air Quality, Bay Area Air Quality Management District (BAAQMD), Chevron Refinery, Global Warming Solutions Act of 2006 (AB 32)

Richmond councilman: Don’t let industry dominate debate – Residents should demand clean air

March 27, 2015 Roger Straw

Repost from The San Francisco Chronicle

Richmond councilman: Don’t let industry dominate debate

Residents should demand clean air

By Eduardo Martinez, Open Forum, March 26, 2015

As host to one of the biggest petroleum refineries in California, Richmond needs its residents to remain vigilant. The Bay Area Air Quality Management District is considering new refinery regulations that would require Chevron to disclose and measure the toxic emissions of its Richmond refinery and reduce them if they rise above stipulated limits, as has often occurred in the past. The air district held public workshops last week in Richmond, Martinez, Benicia and San Francisco. I urge concerned citizens to submit additional comments to the district before its March 27 deadline.

We need citizens to stand up because Big Oil doesn’t give up. The oil industry is spending tens of millions of dollars to derail our state’s landmark climate-change law, AB32. And it’s using some of the same sneaky tactics that Chevron deployed against me when I ran for Richmond City Council. Telling the truth is too risky, I guess: The vast majority of Californians want clean air and a livable climate.

Chevron, the oil giant that ranks by assets as the 18th biggest company in the world according to Forbes, spent some $3 million on advertising against me and other candidates when we ran in November’s election.

Despite being outspent by 20 to 1, my team and I fought back with a grassroots campaign that showed how people power still can triumph over big money. And I can tell you, standing up to a bully feels good, especially when you win.

The industry’s battle plan was revealed in a slide deck prepared by its lobbying arm, the Western States Petroleum Association, which was leaked to Bloomberg BusinessWeek. Instead of engaging in open public debate about clean energy and climate progress, the association has created and funded front groups that appear to consist of ordinary people — who just happen to share the industry’s point of view.

Oil companies also invoked the bogeyman of higher taxes. “Stop the Hidden Gas Tax” proclaimed countless billboards, TV and radio ads for weeks before Jan. 1, 2015, the day transportation fuels came under the AB32 emissions cap.

There was no hidden tax. Nor has the industry’s broader claim — that AB32 would weaken California’s economy and drive away businesses — proved true. In fact, California’s economy has grown since AB32 began. We have the largest advanced energy industry in the United States, employing more than 430,000 workers, and the Golden State’s manufacturing sector leads the nation in total output. The U.S. Bureau of Labor Statistics announced that California vaulted over Texas as the state with the largest job growth during the past year. All this growth — and our per capita carbon emissions have dropped 17 percent since 1990.

To be sure, this increased prosperity still hasn’t reached all Californians. But the solution is not to gut our clean air laws; it is to accelerate our development of renewable energy sources and improved energy efficiency — labor-intensive activities that employ more people than drilling for oil and gas.

We need to keep shining a light on the activities of opponents to clean energy.

As a resident and public official in Richmond, I care about petroleum use for another reason as well. In 2012, an explosion at Chevron’s Richmond refinery led some 15,000 people to seek hospital treatment. The refinery’s typical emissions also take a terrible toll, as I witnessed during my 18 years as an elementary school teacher. So many students were afflicted with asthma that our school founded an Asthma Club to help kids, teachers and parents cope. That should not be.

Californians deserve clean air, a stable climate and public policy that prioritizes those goals. We should strengthen, not weaken, AB32. Tell the air district that.

Eduardo Martinez serves on the Richmond City Council.

Bakken Crude, Benicia CA, BNSF Railway, CPC-1232, Derailment, DOT-111, Earthjustice, Explosion, Fire, Tank car design, Tank car retrofit, Union Pacific Railroad, Valero Benicia Refinery, Valero Crude By Rail, Valero Energy Corporation, Western States Petroleum Association (WSPA)

KQED covers rail and oil industry “show and tell” in Sacramento

February 24, 2015 Roger Straw

Repost from KQED Science, NPR

Railroads, Big Oil Move to Ease Fears Over Crude Shipments

By Daniel Potter, KQED Science | February 24, 2015

This CPC-1232 tank car represents an upgrade over an older models criticized for being easily punctured, but critics say there's still much to be desired. (Daniel Potter/KQED) — This CPC-1232 tank car represents an upgrade over an older models criticized for being easily punctured, but critics say there’s still much to be desired. (Daniel Potter/KQED)

Facing growing apprehension among Californians, railroads and oil companies are trying to allay fears over the dangers of hauling crude oil into the state.

Tensions have been heightened by a spate of derailments, as well as a recently unearthed government report with some sobering projections for the potential cost to life and property from such incidents in coming years. Federal regulators are weighing stricter rules governing everything from modernized braking systems to new speed limits.

In a rare move Tuesday in Sacramento, officials with California’s two major railroads, Union Pacific and BNSF, held a media briefing explaining safety measures ranging from computerized stability controls to special foam for choking out fires.

At the California State Railroad Museum, Pat Brady, a hazardous materials manager for BNSF, showed off a newer model tank car with half-inch thick “head shields” – metal plates extending halfway up on either end. The car was also equipped with “skid protection,” Brady said, pointing to a nozzle underneath that’s designed to break away in a derailment, leaving the valve itself intact, to avert spills.

This tank car, the CPC-1232, is supposed to be safer and harder to puncture than the older DOT-111 version, but it’s facing skepticism after several exploded last week when a train hauling North Dakota crude through West Virginia derailed.

Industry officials at the Sacramento briefing were reluctant to comment about that incident, saying not all the facts are in yet, but several emphasized the importance of keeping trains from derailing to begin with, and claiming that more than 99.99 percent of such shipments arrive safely.

Both BNSF and Union Pacific said tracks used to haul crude through California undergo daily visual inspections, said Union Pacific spokesman Aaron Hunt, as well as a battery of high-tech tests.

“We’re using lasers to measure track gauge and track profile to keep trains on tracks,” he said, and also “pushing ultrasonic waves into our rail to detect potential cracks early.”

Hunt says in a typical month, Union Pacific brings in 1,000 to 1,200 cars loaded with oil, a tiny fraction of the company’s in-state freight. BNSF said its oil haul is even less: about two trains a month. But some predict such shipments could soar in the near future.

Also represented at the briefing was Valero Energy, which is hoping to start bringing two fifty-car oil trains a day to its refinery in Benicia.

“Valero as a company has acquired over five thousand rail cars,” said Chris Howe, a health and safety manager at Valero’s Benicia facility. “We’re able to get a number of them committed to our project, so we will likely be using Valero cars of these newer designs.”

The industry’s shift away from the DOT-111 model is “a useful step,” says Patti Goldman, managing attorney with Earthjustice, who adds that the newer cars are still “not nearly safe enough.”

“What you need to do to prevent catastrophes when trains do leave the tracks is have far better tank cars to be able to prevent the leaks and explosions in the first place,” says Goldman.

Earthjustice is in a legal fight pushing for stronger oversight and regulation. Goldman charges that it’s taking a long time to fully phase out older models because the industry is more focused on growing fleets rapidly.

“That’s just inexcusable,” she says. “We don’t think they’re allowed to do that. We think they need to get these hazardous tank cars off the rails before they start increasing the amount of crude oil that’s going to be shipped on the rails.”

California Regulation, Crude By Rail, Funding for emergency response, Massive increase in crude-by-rail, Oil spill

CA Fish & Wildlife wants new emergency regulations by September

July 7, 2014 Roger Straw

Repost from The Los Angeles Times, Business
[Editor: Significant quote: “Plans also call for safety drills and, possibly, the placement of safety equipment at potentially dangerous rail ‘pinch points.’ …These points include spots along rail routes through the Feather River Canyon and Donner Pass in Northern California, the Tehachapi Pass and San Luis Obispo in the central part of the state, and urban rail corridors in Southern California, officials said.” Hmmm … how about urban rail corridors in Northern California?? – RS]

State moves to improve safety in transporting oil by rail

Marc Lifsher, July 7, 2014

1889739_FI_0603_Crude_By_Rail_IK — A year after rail tanker cars carrying crude oil in Canada exploded and killed 47 people, California is stepping up efforts to prevent a similar disaster on tracks crisscrossing the state. (Irfan Khan / Los Angeles Times)

A year after rail tanker cars carrying crude oil in Canada exploded and killed 47 people, California is stepping up efforts to prevent a similar disaster on tracks crisscrossing the state.

In recent weeks, the state began pumping more money into a new rail safety program, the Legislature approved new fees on oil being carried by train, and the state’s Fish and Wildlife Department started planning how to better protect inland waterways from oil spills.

“We have a clear and present risk to Californians right now from potential spills,” said Chuck Bonham, Fish and Wildlife director. “We’re moving fast per the Legislature to best prepare California for that risk.”

There’s good reason for rushing, Bonham warned. Crude oil shipments to California last year rose to 6.3 million barrels, up 1.1 million barrels from the 2012 total. Imports could rise to 150 million 42 gallon barrels, a quarter of the state total, by 2016, the California Energy Commission estimates.

The Fish and Wildlife Department, which oversees the state’s Office of Oil Spill Prevention and Response, is set to hire 38 technicians to boost a current crew of 250 people, previously funded to deal mainly with coastal oil spills.

Top Fish and Wildlife officials already are meeting with other federal, state and local government agencies to set priorities and schedule a series of emergency response drills at high-risk stretches of rail lines, such as in the mountains, marshlands and densely populated urban neighborhoods.

The new hires and expanded responsibility will be paid for by a fee of 6.5 cents per barrel of crude oil transported through the state by rail or pipeline. The fees were approved by the Legislature in mid-June after a heated battle between California’s powerful oil industry, the administration of Gov. Jerry Brown and environmentalists.

The governor basically got what he wanted: a dedicated source of money to help respond quickly to both maritime spills and potential and actual accidents involving pipelines and rail tanker cars bringing crude oil to refineries from in-state wells and fields in the Great Plains and Canada.

But that’s just part of the state’s response to the threat posed by train wrecks involving crude oil cargoes. The state Public Utilities Commission is hiring seven additional track inspectors to work with federal government counterparts to keep oil trains with up to 100 tank cars rolling safely.

And lawmakers still are considering even more measures to require railroads to provide greater information about oil trains passing through communities, establish round-the-clock emergency communications, and levy per-tank-car fees for emergency response activities.

“The funding in the budget is an important step,” said Sen. Fran Pavley (D-Agoura Hills), author of one of three tank-car-safety bills, “but more actions can be taken to help prevent and respond to accidents.”

The Brown administration’s goal is to set up a comprehensive system for safeguarding an estimated 7,000 rail and 5,000 pipeline crossings over inland waters.

With that in mind, Fish and Wildlife already has hosted a number of meetings with state and federal government agencies, including the State Fire Marshal and the U.S. Coast Guard, that also deal with oil spills. State officials are reaching out to railroad companies and tank car manufacturers, who are working on more crash-resistant rolling stock.

“The folks who transport oil and store oil in appreciable volume need to develop contingency plans for how to protect sensitive sites,” said Thomas Cullen, a former Coast Guard captain, who runs the state’s prevention and response program.

Plans also call for safety drills and, possibly, the placement of safety equipment at potentially dangerous rail “pinch points.”

These points include spots along rail routes through the Feather River Canyon and Donner Pass in Northern California, the Tehachapi Pass and San Luis Obispo in the central part of the state, and urban rail corridors in Southern California, officials said.

“We’ve got to go shoulder-to-shoulder working with industry,” Cullen said.

One of the first steps, he said, will be issuing emergency regulations for rail and pipeline oil transportation, which he hopes can happen by September.

Officials said permanent regulations should be ready about a year later, after Fish and Wildlife holds hearings to get input from railroads, oil companies, environmentalists, local government agencies and neighborhood groups.

Oil companies, which had opposed some parts of the governor’s program, including the fee for inland shipments, say they want to cooperate with the state’s expanding safety efforts.

“It’s going to add some additional expense to getting California energy to consumers,” said Tupper Hull, a spokesman for the Western States Petroleum Assn., a trade group.

“Our primary concern,” he said, is to see that state money goes to first responders “to give them the equipment and training necessary so people can have confidence that this is a safe transportation mode.”