If you think gas prices are high now, just wait till the state takes over the oil refineries.
That’s an option the California Energy Commission is presenting to legislators and other policymakers “to ensure steady gas supplies as oil companies pull back from the refinery business in the state,” reported the Los Angeles Times.
“Pull back”? They are being driven out.
The paper noted countries with government-run refineries include Russia, China, Venezuela and Iran. Sure, California likes to do things differently, but any policy should be reconsidered when your main models are authoritarian regimes.
It shouldn’t be forgotten that California’s loss of oil refineries is a problem caused by the state itself. Last August, Chevron announced it was moving its headquarters from San Ramon to Houston. On Feb. 9, the Wall Street Journal reported on a call CEO Mike Wirth held with investors, when he said, “Putting bureaucrats in charge of centrally planning key segments of the economy hasn’t worked in other socialist states. I doubt it will be any different in California.”
Among other laws hyper-regulating the industry, last October 14 Gov. Gavin Newsom signed ABX 2 1, which micromanaged refinery “resupply plans” and maintenance. At the bill signing, Newsom said it was necessary because the oil companies have “been screwing you for years and years and years.” Two days later Phillips 66 announced it was closing its Los Angeles refinery at the end of 2025 due to “long-term uncertainty.”
Consumers are the ones paying the price for this any many other features of California’s regulatory environment. On Feb. 19, the Auto Club clocked California’s average gas price for regular at $4.85 a gallon. That’s 53% higher than the national average of $3.16. It’s also 81% higher than the $2.68 of Mississippi, the cheapest state.
Further showing its incompetence, the California Energy Commission also regulates electricity production. A January report by the Legislative Analyst’s Office found our electricity rates spiked 47% from 2019-23, even as the Consumer Price Index rose 19%. The rates are “close to double the national average,” with only Hawaiians paying more.
As to California’s ability to actually run a major industrial project, there’s the California High-Speed Rail Authority. How’s that going? A Feb. 3 review by Benjamin M. Belnap, the project’s inspector general, looked at the train’s Merced-to-Bakersfield Segment, the only one even close to completion. He found the authority is “not on schedule to finish the M-B segment as currently envisioned” and “faces a $6.5 billion funding gap.”
Belnap noted the authority is expecting $2.5 billion in federal funding by 2026. That’s a pipe dream. At his Feb. 4 press conference, President Trump called it “the worst managed project I think I’ve ever seen, and I’ve seen some of the worst…. We’re going to start an investigation in that because it’s not possible.”
California government needs to stop ignoring reality and stop using energy production as a political football. Socialism is inefficient and doesn’t lower prices, but raises them. The solution to California’s refinery problem is not a government takeover, but deregulation and tax cuts. The Legislature can begin by repealing ABX 2 1 and other legislative attacks on the oil industry.