Asm. Stan Ellis (R–Bakersfield) and energy expert Ted Cordova are sounding the alarm that California’s gas prices could rise to as high as $10 per gallon within the next six months.
They warn that a perfect storm of events – namely more oil refinery closures, underutilized pipelines and the dependence on foreign oil – could cripple California’s economy.
Driving the news: California’s oil production has drastically slipped over the last decade, falling from around 470,000 barrels of crude oil daily to around 170,000 per day.
- Along with the decrease in production, Phillips 66 is set to close its Los Angeles refinery in October, and Valero may close its Bay Area refinery next year.
- A study by USC professor Michael Mische earlier this year found that the pending refinery closures could result in gas prices hitting $8.43 per gallon next year.
State of play: California currently has the highest gas prices in the country. .
- AAA reported Tuesday that California’s average gas price is $4.627 per gallon, much higher than the national average of $3.193 per gallon.
What they’re saying: Ellis raised concerns about the lack of new oil permitting from the state for Kern County, fearing that it could force the closure of the PBF Energy oil pipeline that runs from Bakersfield to Torrance.
- “Let’s just say PBF in Los Angeles shuts down, P66 shuts down, Valero shuts down. Guess what we’re going to do? We’re going to start shipping gas at $5 to $8 a barrel to get it here,” Ellis said during a press conference on Monday. “So transportation costs, loading costs, all of those things raise the price. It’s all about logistics. If we can in fact get that volume of reformulated fuel. So it’s supply and demand. You can’t get it, you’re going to pay more for it.”
- Ellis also said the crisis is a national security issue that could explode from a catastrophic event such as a tsunami or a war, given California’s dependence on foreign oil.
- “We do not have a pipeline to bring our crude and our products from Texas,” Ellis said. “We are bringing out products from other countries into our ports, and it’s a matter of national security. So you add those two things – national security and the cost of living – we are in a dangerous situation.”
- Cordova, the Vice President of government and regulatory affairs for E&B Natural Resources, joined Ellis in calling for California to make changes.
- “We agree we are at a critical time where the state needs to make decisions and updates to the law to solve the current California energy crisis now,” Cordova said. “From our company’s perspective it definitely has become harder to do business in California, and it has been even harder to meet California’s demand for petroleum needs.”
