Regulators at the California Energy Commission under Governor Gavin Newsom announced earlier this month that they would impose state controls on the oil industry, ostensibly to counteract future increases in energy prices. Earlier this month, oil company Chevron announced that it would move its headquarters from San Ramon, California, to Houston, Texas.
With the California Legislature set to adjourn on Friday, Governor Newsom is threatening to call a special session if lawmakers do not pass his proposal to impose price controls on the oil and gas industry along the lines of Venezuela – unless lawmakers pass his latest proposal to control California’s oil industry.
Rep. Bill Essayli (R-Riverside) took offense at Newsom’s threat:
“I’m pretty sure we call this blackmail. How about saying no to both demands? Go away,” Essayli tweeted.
According to Newsom, who sounds more like Hugo Chavez:
“The state has found that when refineries restrict the supply of gasoline, prices at the pump skyrocket, giving oil companies huge profits. Today, Governor Gavin Newsom announced a new, first-in-the-nation proposal to further prevent price spikes and save Californians money.
The Suggestion would authorize the California Energy Commission (CEC) to require oil refineries to maintain a minimum fuel reserve to avoid supply shortages that lead to higher prices for consumers. If this proposal were to take effect in 2023, Californians would have saved over $650 million in gasoline costs due to price spikes from refineries.”
Newsom’s proposal makes no mention of California’s highest gasoline tax in the country…
The Western States Petroleum Association explains how devastating Newsom’s proposal would be:
“There are bad regulations, and then there are regulations so harmful that industry experts, the California Energy Commission, and anyone with a basic understanding of economics can clearly see the harm they will do to consumers. Governor Newsom’s refinery supply rule will create artificial fuel shortages in California, Arizona, and Nevada by forcing refineries to withhold fuel from the market. Lawmakers who vote for this rule will be voting for higher gasoline prices for their constituents.”
Newsom’s proclaimed control of the oil and gas industry is doing the opposite of what he claims.
After being sidelined by the DNC, Governor Newsom seemed desperate for attention. He acted more like a governor than ever. He now seemed concerned about the explosion of homeless encampments and even helped clean up encampments across the state. But that was just a ruse – rumors say that Newsom is seething with anger after his rebuff and is looking for retaliation.
Taking over California’s oil industry could get Newsom the attention he seeks, as he explains below:
“What you need to know: Price spikes for consumers mean profit spikes for oil companies, and they are largely caused by refineries not replenishing their inventories when they are down for maintenance.”
The Western States Petroleum Association vehemently disagrees:
“California already faces a de facto production ban that requires more than 75 percent of the crude oil our state consumes to be imported from overseas. In addition, the impending ‘berthing’ regulations that will take effect in a few months could exacerbate this problem by restricting transportation and causing significant declines in the supply of crude oil and other fuels needed to meet the state’s energy needs. WSPA has repeatedly warned the administration and lawmakers about the cumulative impact of these supply-constraining measures, but to no avail.”
Oil and gas enable our comfortable lifestyle, but are under attack
California is rich in natural resources that once provided energy to the state and beyond: natural gas deposits in the Monterey Shale Formation, geothermal energy, numerous rivers and waterways such as the San Joaquin River Delta and hydroelectric dams, the Pacific coast, 85 million acres of wilderness, 17 million of which are used as commercial forestland, mines and mineral resources, vast agricultural and ranching areas, and hunting and fishing areas.
But California’s politicians and appointed officials, under the guidance of radical environmental organizations and lobbyists, chose to ignore the natural resources that produce energy and instead pushed for the construction of a pure electricity grid and the only permitted “renewable energy”: solar and wind power or “boutique fuels.”
The governor, environmentalists and the left are pushing to rid California and the United States of oil and gas. And that pressure is being intensified under the guise of “climate change.”
Yet only 1% of Americans say that “climate change” is the most important issue in the country – until government restrictions on energy sources are imposed, leading to higher energy prices.
Governor Newsom’s response to California’s highest gasoline prices in the country is “price controls” – the worst response he could think of.
As the Globe reported, oil is the only source of energy that has lifted people out of poverty and given us unimaginable products and services and the ability to travel.
Thanks to technological advances largely funded by oil companies, air pollution and greenhouse gas emissions have been reduced so drastically that, for example, the number of days with “poor” air quality in Los Angeles has decreased by two orders of magnitude.
With oil production through horizontal drilling and fracking, the United States has achieved energy independence and would have become a net exporter of oil and gas by 2025 if the Biden administration had not stopped fracking and the Keystone Pipeline.
During Donald Trump’s presidency, California produced more than 200 million cubic feet of natural gas in 2017, which was used for heating and cooking in homes and businesses, as well as for electricity generation.
The Utica Shale, which covers much of the northeastern United States, is said to contain the richest natural gas and oil reserves in the country. Excavations in the Bakken Shale in North Dakota alone have discovered enough gas to supply generations to come.
California sits on the Monterey Shale Formation, a 1,700-square-mile oil-bearing shale formation located primarily in the San Joaquin Valley that contains an estimated 15 billion barrels of oil. The Monterey Shale Formation is a resource larger than the Utica Bakken Formation and the Eagle Ford Formation in Texas combined and is one of the largest known deposits of recoverable oil and gas.
However, the oil and gas industry is one of the most highly taxed and regulated industries.
Governor Newsom claims that it is not the state’s highest gasoline taxes and prices in the country that have caused a dramatic increase in gasoline/oil prices, but rather the oil industry’s price gouging. In May, Newsom even signed a law against gasoline price gouging.
The California Energy Commission disagreed with the governor at the time, pointing out that gas price spikes in recent years have occurred because refineries have been shut down at times because they are not receiving enough oil. The CEC also said the lower prices this year are due to many factors, including lower industry costs and profits, lower crude oil costs and the amount of revenue the industry is raising for environmental protection programs, the Globe reported. Prices could be even lower, but as the CEC noted, only the gasoline tax itself has increased.
A recent CEC study states: “Gasoline remains the dominant fuel in California, and demand is not particularly responsive to short-term price spikes.”
Nevertheless, Newsom’s Venezuela-like proposal would:
- Require California oil refineries to submit to the CEC replenishment plans and agreements adequate to offset production losses due to refinery maintenance.
- Authorizing the CEC to require oil refineries to maintain sufficient fuel stocks to stabilize fuel supplies.
- Impose penalties on refineries that fail to comply with these requirements.
The Globe reported in August on the CEC’s proposal for government control of the petroleum industry:
“The state of California would acquire and own refineries in the state to control the supply and price of gasoline,” the study’s authors wrote, adding that the scope of the initiative ranges from “one refinery to all refineries in the state.”
Governor Newsom cites EU law to justify his proposal:
“The European Union has adopted an oil stockpiling directive that requires EU countries to maintain emergency stocks of crude oil and petroleum products equivalent to at least 90 days of net imports or 61 days of consumption, whichever is higher.”
Petroleum products are ubiquitous in modern society. They include transportation fuels, household and heating oils, oils used to generate electricity, asphalt and road oil, and the raw materials used to make chemicals, plastics and synthetic materials found in nearly all of the items we use today.
Here is a partial list of the extensive catalog of products and material goods made possible by oil and gas:
- Clothes, Birkenstock sandals, sneakers, umbrellas, sunglasses, nail polish, hair curlers;
- Computers, calculators, telephones, batteries, pens, copiers, cameras, flashlights;
- Motorcycle helmets, life jackets, dog leashes, tires;
- Pacifiers, baby bottles, diapers, crayons, car seats, laundry baskets;
- Fishing rods, soccer balls, Frisbees, golf equipment and golf balls, footballs, shotgun shells, tents and sleeping bags, guitar strings;
- Inhalers, first aid kits, heart valve replacements, hearing aids, medication bottles;
- red solo cups, coffee pots, Teflon pans, freezer bags and containers, coasters;
- Water pipes, smoke detectors, pillows and even sofas;
- Everything at REI, everything at Camping World;
- Everything in a Prius – especially the comfortable seats.
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