Chevron threatening to leave California |
Chevron threatening to leave California
Chevron said it is threatening to close its oil refineries in California due to overregulation, which the oil company said is contributing to price spikes amid the war in Iran.
Due to California’s taxes, emissions rules and other regulations, which hit gas costs harder than in many other states, the price per gallon is well over the national average.
Tehran’s decision to effectively shut off the Strait of Hormuz has left millions of barrels of crude oil stationary, hurting economies in Asian countries, which heavily rely on oil from the Middle East.
In turn, Chevron, which imports fuel from China, South Korea and Singapore, is facing the brunt of the blockade. Amid the energy crisis, Beijing has banned fuel exports.
Andy Walz, who heads Chevron’s oil refining efforts, said leaders in California should be worried about the possibility of a fuel deficit in the Golden State.
“We have refineries in Asia that are having to cut crude, and so they’re going to make less products,” Walz said in an interview with Bloomberg on Tuesday. “What if San Francisco doesn’t have the jet fuel it needs? Or Los Angeles? Or maybe gasoline?”
The Chevron executive said California has decided to “rely on imports,” which is playing a “dangerous game” when it comes to the fuel market.
Walz has urged California Gov. Gavin Newsom (D) and other officials to consider boosting in-state oil production and reevaluating its proposed incentives for companies that utilize renewable energy.
Last year, Phillips 66 closed its 650-acre oil refinery complex near the Port of Los Angeles after Newsom signed a new law regulating gas storage and refineries.
Chevron, which has operated in California for more than 140 years, says others are likely to follow suit.
“California refineries supply a broad range of transportation fuels, including aviation fuels that are critical to commercial and military operations, and they operate near major ports, military installations, and strategic hubs serving the Pacific region,” Chevron wrote in a letter to Newsom earlier this month.
“Continued erosion of California’s refining capacity risks increased reliance on imported fuels that are slower to arrive, more exposed to global supply disruptions, and less reliable during emergencies or periods of heightened geopolitical risk,” the company added.
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