Within days, California may adopt a new environmental policy that will reverberate through the regional, U.S. and even global economy, threatening to reignite the inflation that marred Joe Biden’s term as president while pushing pollution into sensitive marine environments.
On November 8, the California Air Resources Board, CARB, is voting on radically accelerating its Low Carbon Fuel Standard, which it says would increase fuel costs in California by about $162 billion through 2046.
CARB’s Low Carbon Fuel Standard rewards or punishes fuel producers relative to a rising “clean” standard. The new proposal would reduce the carbon intensity of fuel by 90% compared to the 2010 baseline by 2045, instead of the current 20% by 2030.
The measure’s $1 billion in new annual costs for refineries could lead to forewarned shutdowns by Chevron and Valero, which manage nearly half of California’s refining capacity. Arizona and Nevada, which rely on California for fuel, already face shortages from Phillips 66’s announced refinery shutdown in the aftermath of last month’s new refinery regulations.
Replacement fuel would need to be drilled from the Middle East, refined in Asia, then shipped to California’s ports, rated by the World Bank as the world’s worst. Chevron says American fuel won’t suffice because of the Jones Act, which requires shipping between American ports to be on American-built-and-crewed ships that don’t exist in sufficient numbers.
That means importing a staggering amount of fuel. Replacing just the Phillips 66 refinery’s gasoline requires 90 massive tankers annually. Adding Chevron and Valero’s total production, and Phillips 66’s jet fuel and diesel means another 738 tankers, for a total of 828 tankers per year.
California lacks infrastructure to handle nearly a thousand giant tankers, and the environmental impact would be catastrophic. These tankers would chug 35 days from the Middle East to Asia, then 35 more days to California — time that doesn’t include going back for more — each burning an optimistic 33 tons of bunker fuel daily. That’s two million tons of bunker fuel annually, creating emissions equivalent to 1.3 million cars while turning the Pacific into a superhighway for volatile refined fuels where one accident could spell environmental catastrophe.
California’s ports face a new wave of “modernization” that replaces reliable diesel equipment with machinery that needs to be recharged and that legislators say will slow the ports down. They also face emissions rules requiring ships to either connect to shore power, which most tankers can’t do, or wait for special emissions scrubber barges that don’t exist for tankers yet. Tankers will burn dirty fuel while waiting offshore for eventual scrubbers — negating the whole point while reflecting California’s emissions “reduction” strategy of just moving emissions somewhere else.
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CARB admits the proposal would add 47 cents per gallon to gasoline, 59 cents to diesel, and 44 cents to jet fuel next year. That’s $7.05 more for a 15 gallon tank of gas and $35.20 more for a round-trip LA-NYC airline ticket. With transportation comprising 7% of goods’ costs and California’s seaports handling 40% of U.S. imports and 30% of exports, consumers nationwide will pay through costlier food — California produces ⅓ of America’s vegetables and three quarters of its fruits and nuts — and everyone will pay more for any electronics, clothing, components, and other goods that touch or go through California in any way.
With all but two of CARB’s voting members appointed by California Governor Gavin Newsom, the economies of California, Arizona, Nevada, the United States, and even the world are in the governor’s hands. Newsom has responded to Californians’ outcry about crime and homelessness, but will the American business community and public be loud enough to get the governor to reverse course? Now that’s up to you.
Kenneth Schrupp is a Los Angeles-based journalist covering California politics and policy.