A case of supply/demand: Why local energy is priced high

While oil production is down in the Golden State, our need for oil (and excessive taxes/regulations on production) is not — so is it surprising that residents pay a pretty penny for imported power? The Heartland Institute’s energy advisor Ronald Stein breaks down our “self-inflicted” energy crisis, excerpted here.

While the governor is doing everything he can to shut down oil production in one of America’s most oil-rich states,  the governor is blindly pushing California energy policies ahead of our basic energy realities – leaving the state at the mercy of an unstable world for the vast majority of its energy supplies.

While the U.S. scrambles to protect its energy security, California oil production is down 25 percent under Newsom, costing the state and the country millions of barrels of badly needed supply that could help ease prices at the pump and protect against volatility.

Under Newsom’s watch in the last few years, two of California’s refineries have virtually shut down and are no longer manufacturing gasoline, aviation fuels, or any oil derivatives for all the products in our society. Those two, Phillips66 at Rodeo that represented 7 percent of petroleum production capacity, and Marathon at Martinez that represented about 6 percent of in-state capacity, are now only focusing on renewable diesel. Shuttered petroleum refinery capacity is gone for good….

Price spikes occur around unplanned refinery maintenance and are more dramatic than in the rest of the country because of the isolation from alternative supplies. Not discussed in this “mirror mirror” exercise, are the components of the higher fuel prices that include California’s higher excise, sales, and local taxes, plus the greenhouse gas fees that other states don’t have.

This article originally appeared in The Heartland Institute. Read the whole thing here.

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