If you live in California then you’ve definitely noticed the price of gas in the past few weeks which has gone up more than a dollar. Of course prices have gone up everywhere but California had the highest prices in the country to start with (with the exception of Hawaii) so we’re now seeing $6 per gallon for gas and $7 for diesel.
As gasoline prices have risen since the war in Iran began, no state has felt the pinch at the pump more than California, where a gallon costs nearly $2 more than the national average.
Gasoline prices have long been higher in California because the state uses a special fuel blend that releases less pollution when it is burned. California also imposes higher taxes and environmental fees than other states.
But the war has highlighted another major issue for the state and its economy: California has lost almost three dozen oil refineries since the early 1980s, forcing it to import fuel from as far away as Asia.
On Tuesday, a gallon of gasoline averaged $3.98 nationally and $5.82 in California, according to AAA. Those prices were up from $2.95 and $4.63 a month earlier…
“California was going to have a crisis before the crisis,” said Paul Sankey, president of Sankey Research, an oil and gas research company. “They strangle their supply side.”
In short, special blends mean California can’t get more gas from neighboring states. Instead, it has to be imported from overseas. Add in state and local taxes of $0.90 cents per gallon and you get the highest prices in the contiguous United States. According to AAA, today’s average price for Diesel is the highest ever recorded at $7.072.
Earlier this month, the Trump administration declared an emergency under a cold-war-era law which allows it to order the production of oil and gas even over state objections.
As the war in Iran sends global fuel prices soaring, the U.S. Department of Justice has released a legal opinion claiming that President Trump has the authority to override California laws and regulations that have blocked a controversial offshore oil operation by invoking the Defense Production Act.
The 22-page opinion, published this week by the department’s Office of Legal Counsel, takes aim at the many state regulators and agencies that have not yet approved production plans from Sable Offshore Corp. — the Houston-based firm that has struggled to revive long-dormant oil infrastructure along the Santa Barbara County coast. The opinion calls the networks of offshore rigs and connected pipelines “a critical energy resource on the West Coast.”
According to the opinion, a presidential order issued under the Defense Production Act of 1950 “would preempt the California laws currently impeding Sable from resuming production and operating the associated pipeline infrastructure.”
The Defense Production Act provides the president broad authorities to influence domestic industry in the interest of national defense or emergencies. It has been used, by former President Biden to help respond the COVID-19 pandemic, while Trump invoked the act last March in order to ramp up domestic mineral production.
So presidents from both parties have used this in cases of emergency and the practical result of this is that several offshore oil platforms located near Santa Barbara, California have started pumping oil through pipelines into the state where it will be refined into gasoline. But the state, in the form of AG Rob Bonta, is suing the administration to stop the flow of domestic oil.
The California Department of Justice on Monday filed a lawsuit challenging a Trump administration order that called on a private Texas-based firm to revive controversial oil pipelines along the Central Coast despite ongoing state and local objections.
The March 13 order from U.S. Department of Energy Secretary Chris Wright invoked the Defense Production Act as justification to supersede state laws and restart the disputed pipelines. The lawsuit, filed Monday in federal court for the Northern District of California, called the order a “breathtaking power grab.” In the complaint, Atty. Gen. Rob Bonta said the order is unconstitutional and unlawful and asked that the court suspend it and halt the opening of the pipeline.
“The Trump Administration and its oil industry buddies are once again violating the law and trampling on our state’s rights in pursuit of corporate profits,” Bonta wrote in a statement Monday. “California has seen first-hand the devastating environmental and public health impacts of these pipelines rupturing, and there are court-ordered legal requirements in place to ensure that it doesn’t happen again. But instead of following the law, the Trump Administration and an increasingly desperate Sable [Offshore Corp.] are attempting to ride roughshod over state authority and judicial independence.”
Chevron, which recently warned California that taxes were killing the refinery industry in the state, announced it would be buying 20,000 barrels a day from Sable’s offshore platforms.
Oil giant Chevron will begin purchasing oil from Sable Offshore Corp., the Houston-based company announced Tuesday. The dramatic move comes amid a legal battle between California and the Trump administration.
The petroleum corporation plans to purchase an initial 20,000 barrels of oil per day from offshore platforms near Santa Barbara, just weeks after the federal government approved the restart of production, Bloomberg reported…
“We’re going to run Sable’s crude at El Segundo in April,” Chevron executive Andy Walz told the outlet, adding that the Los Angeles-area refinery — which can process about 269,000 barrels per day — is set to handle the supply.
California’s argument is that Sable’s pipelines were shut down in 2015 after a large oil spill which blackened the state’s beaches. But the company argues the pipeline has been repaired.
Sable has said it has since fully repaired the pipelines.
The so-called Santa Ynez Unit, which includes the pipelines, offshore rigs and a processing plant, was under different ownership at the time of the oil spill.
But for more than a year, the company clashed with state and local regulators as it attempted to restart oil drilling and transport.
To sum it up, California is seeing record gas and diesel prices thanks in part to it’s need to import gas from Asia. The Trump administration is opening up some domestic production that was shut down in 2015 and California is suing to stop that domestic production. This seems like a counter-intuitive thing to do in the midst of a spike in gas prices, but this is how things work in California under Gavin Newsom.
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