Guy Mazorati interview with Severin Borenstein and Alex Nieves

KQED Forum, by Guy Marzorati, Aug 7, 2025

This partial transcript was computer-generated. While our team has reviewed it, there may be errors.

Guy Marzorati: This is Forum. I’m Guy Marzorati, in for Alexis Madrigal.

During Gavin Newsom’s time as governor of California, he’s had one constant foe — one year-in, year-out rival with whom he seems to relish every single fight — California’s oil and gas industry. But that all might be changing, as oil refineries announce closure plans in Los Angeles and here in Benicia, making California’s complex energy transition even more complicated for the governor and fellow Democrats in the state Capitol.

That’s what we’re going to be talking about this hour with Alex Nieves, California transportation reporter at Politico. Good morning, Alex.

Alex Nieves: Good morning. Thanks for having me.

Guy Marzorati: Great to have you with us. And Severin Borenstein, director of the Energy Institute at UC Berkeley’s Haas School of Business. Good morning, Severin.

Severin Borenstein: Good morning.

Guy Marzorati: Thanks so much for joining us. And later, we’ll talk with Tim Grayson, California state senator representing parts of Contra Costa County, including the refinery community in Martinez.

Alex, I want to start with you. We’ve seen Newsom go to the mat against the oil and gas industry for years. What’s going on now?

Alex Nieves: Yeah. As you mentioned, over the last four years, Governor Newsom has really gone much further than his predecessor, Jerry Brown — who focused on getting folks to transition to EVs and cleaner technologies but didn’t really target the supply side of the equation.

Governor Newsom, on the other hand, has made some strong efforts to target industry priorities. I think of the ban on fracking as one example. We’ve also seen, in a couple of special sessions, lawmakers pass legislation around a price cap and maintaining minimum storage at refineries to prevent shortages when refineries go offline.

Those are all things refiners say will backfire and cause refineries to close, leave the state, or change their business strategies. Those are threats we’ve seen for years, and they haven’t always materialized.

But there’s a big change this time around.

Phillips 66 last October announced it would be closing its facility in Wilmington in the Los Angeles area. Valero announced the pending closure of its Benicia facility in April — and that’s caused a real threat of a decline in refining capacity.

Whenever you lose capacity, you constrain supply. That means an increase in prices — and no lawmaker wants to be in power when gas prices go up.

So recently, we’ve seen the governor change course. The California Energy Commission has issued a slate of recommendations aimed at keeping these refineries open, and Newsom’s office is floating a draft bill that would do a number of things — most notably, streamline permitting for oil-rich Kern County.

Guy Marzorati: Do you have the sense that Newsom was caught off guard by the refinery closure announcements?

Alex Nieves: I do — maybe less so for Wilmington, which is one of the older facilities in the state and had signs this could happen. But Benicia is a facility that I’ve heard from sources wasn’t really on the table for immediate closure.

You could see it in the state’s messaging after the Wilmington closure was announced. Ty Milder, the governor’s oil czar, kind of pushed it aside and said the state could survive — it wasn’t an immediate concern.

Immediately after the Benicia refinery announcement, I think the state went into panic mode.

Guy Marzorati: And how much of this is about the result of last year’s election too? Because we saw Democrats come back to Sacramento this January with, like, a vow renewal on the cost of living — it was going to be a top priority. How do you see that playing into this conversation?

Alex Nieves: Yeah, and it’s not just in California. Nationally, we’re seeing the Democratic Party on a course correction — a focus on cost of living and affordability.

Notably, at the beginning of this session, Assembly Speaker Robert Rivas announced that anything that doesn’t fall within this affordability frame is something the state shouldn’t consider. And I, as a climate reporter, took that to include climate action.

Take a step back a couple of years — the governor and Attorney General Rob Bonta were spearheading a lawsuit to hold companies liable for climate-change-related damages. And as recently as last October, we were writing stories about how the oil industry’s influence was waning in the state.

That’s completely changed. And I do think it’s because Democrats are looking toward 2026 and trying not to seem tone-deaf. Every gubernatorial candidate we’ve seen so far has committed to keeping refineries open.

So yes — I think it’s a reflection that the Democratic Party feels like they may have missed where voters were in November.

Guy Marzorati: Severin Borenstein, do you see this as a major policy pivot by the Newsom administration?

Severin Borenstein: Oh yeah. It’s definitely a pivot.

The direction over the last few years has been to go after the refineries as a major source of high gasoline prices. And that was never really accurate.

If you look at how much money refineries are making — separate that from the profits made downstream in distribution, marketing, and retailing — the big differential, what I call the “mystery gasoline surcharge,” this extra amount Californians pay beyond the higher taxes and fees, is not at the refineries.

If you look at the spot price — the wholesale price of gasoline in California — it’s really not out of line with the rest of the country once you account for the cost of making our cleaner-burning gasoline.

We do have a real gasoline price problem, beyond the higher taxes and environmental fees, and that’s happening downstream.

So I think it’s unfortunate that a lot of people in Sacramento were saying the problem is these refineries are making too much money. The closure of these refineries now suggests that was clearly wrong — that, in fact, they don’t think they can make enough money.

Both of the refineries that are closing faced real environmental costs. They likely did the calculation: is it worth making the huge capital investments necessary to stay in business? Are we going to make enough money over the long run to pay for that?

All of this is happening in the context of California’s major push to reduce gasoline consumption — which has finally started to take hold.

The increase in EVs and higher-mileage hybrid vehicles has been reducing California’s gasoline demand. And as it drops, these refineries are rethinking whether it makes sense to invest.

Benicia was a particular point of pressure because they were under penalties for recent pollution emissions. They were also facing increased scrutiny, and the city was forming a new committee to oversee the refinery and enforce environmental restrictions.

Guy Marzorati: Right. There was local pressure as well. But Newsom has said, look, refineries across the globe are struggling. Is that true?

Severin Borenstein: Yeah. I think a lot of refineries, particularly the older ones, are not making a lot of money.

Going back to the 1970s, refining was not considered a great business. The big, vertically integrated companies made money extracting oil — they sort of broke even or worse on the refining side.

That changed in the ’90s when demand for gasoline took off, and for a while, refineries were making good money — even the less efficient ones.

But as demand has plateaued — and in California, started to decline — they haven’t been able to keep up those profits. So now we’re seeing pressure on them and some decisions to close.

And that’s going to happen. If California reduces gasoline consumption, these refineries will start to close. We need to plan for that — manage the closures, ensure a smooth supply of gasoline, even as we gradually lose refineries.

Guy Marzorati: Yeah. Alex, what are you hearing in the legislature about that planning? Are those plans being made? How is this transition unfolding?

Alex Nieves: We’ve heard the discussion for years, but I think what this episode has shown is that the state just hasn’t put in the time and effort to develop a fully fleshed-out transition plan.

The governor framed his pivot not as a departure from the state’s climate policies but as a recalibration — a slowdown so we can actually put plans in place.

How do you protect workers — including unions that largely support Democrats — as you close these facilities? How do you help a city like Benicia, built around this industry, or a place like Richmond with the Chevron refinery, avoid collapse if a refinery picks up and leaves?

I’ve heard ideas floated — maybe requiring a four-year instead of one-year warning for closures, or requiring some relationship between refiners and the state to create a worker transition plan. But those are things we just haven’t seen yet.

In the immediate term, the state seems to be aiming for policies that keep supply up — increase in-state crude, increase imports. But the actual planning behind a transition? I think that’s the next step — and we’re still quite a ways from a solidified plan.

Guy Marzorati: Yeah. And we’ve got about thirty seconds before the break — but it’s also, you know, Newsom is still trying to hold this mantle of climate leadership, right? He’s still battling with the federal administration while all this is happening in California.

Alex Nieves: Yeah, absolutely. We’ve seen the state file dozens of lawsuits — many of them in the climate, energy, and environmental space.

I think it’s fair to say that California is still a leader in some ways on the federal landscape. But I know that within the state, environmental groups are quite livid. They really see this as a departure from the past.

Guy Marzorati: Yeah. That’s Alex Nieves, California transportation reporter at Politico.

We’re talking about whether California is reconsidering its stance on oil production as two refineries are slated to close. And we want to hear from you.

What would you like to see as these refineries make plans for their future?

Do gas prices affect how you think about the state’s oil production?

Give us a call at 866-733-6786. Or get in touch with us on social @kqedforum or by email: forum@kqed.org.

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