California has made tremendous progress in its transition away from fossil fuel energy and transportation and towards zero emission transportation powered predominately by clean electricity.
But with Valero’s recent announcement that it plans to shutter its Benicia refinery on the heels of a similar notice from Phillips 66’s Los Angeles refinery, elected leaders are panicking about potential high gas prices and fuel shortages.
California is in the classic situation eloquently described in Chappell Roan’s hit single, Good Luck, Babe. We are caught in the middle, struggling with our identity as a state successfully transitioning to clean technologies yet still reliant on gasoline.
We don’t wanna call it off with refineries, but we definitely don’t wanna call it love. We only wanna have someone to call us baby (by which I mean “meet our day-to-day transportation needs while not worsening the climate crisis or air quality”).
So here we are. We can say it’s just the way things are, make another excuse, another stupid reason. Or we can do what the subject of our beloved Chappell’s song could not: come to terms with our complex identity as a global climate leader that must drive down emissions but is still frustratingly reliant on fossil fuels.
You’d have to stop the world just to stop this transition
California has made tremendous progress advancing zero emission vehicles in the state. About a quarter of new cars sold in the state are zero emission and we have more electric vehicle chargers than gasoline nozzles. This progress – along with increased efficiency of gasoline vehicles – has resulted in the reduction of our gasoline demand by 2 billion gallons per year since 2005.
Auto makers in the United States and throughout the world have made significant investments in battery technology and even with federal hurdles, these companies and their investors are committed to bringing EVs to market.
The federal government can certainly slow the transition – and they are – but EVs are here to stay and gas cars are getting cleaner which means we will use less gas. Period.
And this is objectively a good thing. The transportation sector in California makes up the majority of our greenhouse gas emissions and a significant portion of our toxic air pollution. The state must continue this transition full speed ahead.
Refiners are gonna call it off
The transition is happening and must happen. But gasoline demand is declining steadily at a clip of 1-2% per year. When California loses a refinery, our gasoline supply drops by 5-8% all at once. Economics 101 tells us that if there is not enough supply to meet demand, prices will spike.
These price spikes are unacceptable. They line the pockets of the petroleum industries while hurting Californians. Those driving older, less efficient gasoline cars, often low-income Californians, bear the brunt of these high prices after already being disproportionately impacted by fossil fuel emissions.
For the long-term viability of the climate movement and the advancement of future health protective policies, the state must show that it can manage this transition without affordability impacts on working Californians.
California needs enough gasoline supply to meet its declining demand.
I just wanna love someone who calls me Baby
…again, which obviously means something to meet our day-to-day transportation needs while not worsening the climate crisis or air quality. This is a complicated problem that calls for a well-thought-out solution.
Thankfully, the state has started planning for this. We have the Transportation Fuels Assessment which looks at an array of policy solutions that will keep supply in line with demand. UCS has been working on this too.
More recently, Vice Chair Gunda of the California Energy Commission submitted a letter to Governor Newsom with a thoughtful approach to addressing the immediate concerns around price spikes and fuel shortages in the face of Valero’s announcement and interim solutions to make sure we do not face this same challenge year after year.
To be sure, there are proposals in this letter that make my stomach hurt – like reducing barriers to drilling in certain parts of California and speeding up permitting for fuel related infrastructure, but these solutions will provide near-term stability without compromising the long-term transition.
The recommendations can be put into three buckets:
- Immediate actions that will stabilize prices and supply
- Medium term actions that will allow for more gasoline supply to come onto the market in the face of refinery closures and outages. These solutions introduce flexibility and competition into California gasoline markets. See my colleague’s great blog with a thoughtful solution that fits in this bucket
- Long-term solutions that will continue driving down emissions and gasoline demand and look towards the future of refinery communities and workers. This bucket has the fewest specific recommendations in the letter and is where the legislature must focus its attention
The state should take these recommendations seriously and must urgently move forward on all three simultaneously. Further, proposals that would undermine health protections or compromise the transition away from fossil fuels should be rejected.
Standing Face to Face with “I told you so”
If the state does not take steps to stabilize gasoline supply in the short and medium term, the oil industry will be saying “I told you so” when gas prices spike and the most vulnerable Californians cannot meet their everyday needs.
If the state only takes actions that stabilize gasoline supply without steps to advance the transition to zero emissions, communities and residents of California will say “I told you so” as they breath unacceptably toxic air, face severe public health consequence and stare down the impacts of the worsening climate crisis.
The state must thoughtfully solve for both at the same time. The Vice Chair’s letter shows the path and we should follow and build upon it.
Let’s get to work. I’d hate to say “I told you soooooooooooooooooo.”