The Golden State’s “self-inflicted crisis”

When higher energy costs impact everyday lives, it can be a painful reminder that energy policies have real-world consequences.

California is facing just such a moment. Motorists in the Golden State recently paid record high prices for gasoline – prices that were more than 80 cents higher than the national average.

What’s behind this costly surge for consumers?

Some politicians want to blame the energy industry. But what happened last week was a series of unrelated incidents that, when combined with California’s policies that reduce the ability of the market to respond, aggravated an already difficult situation.

It’s important to keep in mind that California’s energy policies have effectively turned the state into a “fuel island” – disconnected from the rest of the U.S. market. California’s state-specific fuel standards and isolated logistics mean that gasoline and diesel can’t be easily brought in from other states when there is a supply shortfall. And a host of only-in-California regulations have raised costs, making it more difficult for refiners to invest in new technologies, and have even forced several refiners to shutter their facilities.

Obviously, it’s a situation that leaves California motorists extremely vulnerable to supply disruptions. The market simply can’t respond adequately within these constraints.

It’s the basic law of supply and demand. When supply goes down and/or demand goes up, there’s usually a corresponding increase in prices that reflects how much more everyone across the supply chain is willing to pay to ensure they have access to a product that has become more scarce.

A corresponding drop in price happens when the market receives signals that a product is plentiful, which is what we are currently seeing as a result of the increase in natural gas production in the United States.

One of several causes in last week’s supply disruption involved ExxonMobil, but we didn’t have the power to do anything about it – literally.

An incident at a Southern California Edison substation cut the power that the utility supplies to our refinery in Torrance. To ensure safety, we were forced to suspend refinery operations, which meant suspending production of gasoline and diesel that supplies some of the California market. It compounded a problem already created by a disruption at a Chevron refinery in the Bay area, and by other unrelated problems. The markets responded to the drop in supply by pushing prices upward.

A Wall Street Journal editorial on Monday described the mix of policy and regulatory choices California has made that have led to higher prices. These choices range from state-specific air-quality requirements to infrastructure impediments and some of the nation’s highest state-imposed gasoline taxes. The Journal is right to declare that “this crisis is self-inflicted.”

Not surprisingly, gasoline price spikes have led a number of California politicians to call for inquiries into alleged market manipulations by energy industry participants.

We agree California’s energy markets are being distorted – but what deserves investigation and public debate are the policies that have put California motorists in such a precarious position.

Of course, California is entitled to adopt the energy and environmental policies it deems best. But recent events are a reminder that government policy can have unintended effects on energy markets. Policies must be sound and market-oriented or the inevitable result will be that consumers suffer the consequences.


67 Comments

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  1. Jimmy Ingersoll says:

    California has historically had a love affair with the automobile. The shame is that the entire state must suffer for the driving habits of its largest cities. The energy problems will not be solved, or at least reduced, until those habits are dealt with. This problem is similar to other policies that have been adopted by California politicians, and that is the root of the problem.

    • mayvon fartin says:

      Love affair? Driving habits? Shame? Are you insane? The “energy problem” like all problems in this country is liberals. The regulations and wasted money on taxes are the problem. There is no “energy problem”.

    • Tony Verreos says:

      Most people who have ever driven love the freedom. The failures we have are failures of urban planning, and lawmakers who act like CA is independent from the rest of the economy. Energy companies have failed epically in the area of safety and upgrading refineries proactively. To the extent the pricing is a CA only problem, the explanation is OK, with one catch: The farther you are from the refinery, the more you should be paying. That’s not the case here.

      I see oil companies as the good guys who make our current way of life possible. I see politicians as the problem makers, not problem solvers.

      • justin jay says:

        Unfortunately the left majority of California (not saying I’m not one) hasn’t allowed the energy corporations to upgrade or build new refineries… The minutes one gets proposed, there’s normally a huge outrageous…. I hate to say it but California needs to make a shift to make it more business friendly. Until a proper fair balance is found…. We’ll be refining oil in 1970 plants

      • Magila Gorilla says:

        Tony your logic is correct, but your are neglecting the incredible transportation efficiency of pipelines. The Colonial pipeline can move a gallon of gasoline from Houston to New York for about a nickel. It literally costs more for the truck to move a gallon of gas from the local terminal 5 miles to the retail station, than to pipeline the gasoline 1,500 miles from the refinery to the terminal. The cost of transportation is included in your pricing, but it is usually based on trucking from the terminal to the retailer, not from the refinery to the terminal. (By the way oil compaines often share pipeline resources in areas where only one line serves a market to ensure competitive pricing) Of course proper pipeline infrastructure is critical, but most of the lines we use today were built before 1970.

        • PEte Swarr says:

          You really are just hurting your own opinion. Yes, they could build the refinery thousands of miles away and pipe it to CA, but that still costs a lot of money. It is still cheaper to build the refinery close to the users I am glad I have been deployed to South Carolina where they like businesses and gas near me costs as little as $3.06, still an outrageous cost.

  2. Patrick Kelly says:

    Just wait until the Low Carbon Fuels Standard is implemented. If California is its own island today; under a LCFS, it will soon be its own planet.

  3. Tyler Harvey says:

    You failed to follow up on this. The latest data show that supplies were only limited because of gross market manipulation, not because gasoline was actually in short supply. And, your weeping about regulations “making it more difficult for refiners to invest in new technologies” is completely glossed over.

    You don’t want to upgrade your refineries because it might impact XOM’s profit margin, not because the regulations make it impossible to be a good steward to the people of California.

    As for the power outage in Torrance, SoCal Edison completely disagrees with your take: http://abclocal.go.com/kabc/story?section=news/local/los_angeles&id=8845849

    Thank goodness there is a state like California that isn’t afraid to fight back against XOM and other oil companies.

    • Steve Prelosky says:

      SoCalEd said their power was a ‘flickering light’ condition. That is all it takes to trip a motor and the related control equipment. It is a safety issue when the power goes off – you don’t want motors starting back up out of phase with the supply system – that can generate tremendous torque and can rip a motor shaft apart.
      I used to work at a small chemical plant that had frequent power supply ‘flickers’ – every time it happened, it would take us 6 to 8 hours to restart the plant. The power company couldn’t understand why it was a problem.
      I am sure that in a facility like XOM’s refinery, there would be whole areas of the plant that would have to be started in sequence, have temperatures and pressures brought to the right conditions, and then subsequent processes areas started. Just because you think they are big bad oil company doesn’t mean they can sidestep basic chemistry and engineering principles

    • James Reid says:

      Yes, Tyler and the other 49 (or is it 56?) states have it wrong. Of course, their gasoline prices were not affected by the continuing debacle in California. It’s good for your psyche that California’s problems are always caused by someone else.

      • Magila Gorilla says:

        Don’t forget Hawaii. They have higher gas prices than California, and regulations that are even worse, including minimum prices to prevent large retailers from hurting the business of mom & Pop stores by offering lower prices.

    • Mr Magoo says:

      What a load of bunk Tyler. Typical Progressive Liberal. Everything is always someone else’s fault. Never the poor policy decisions of the Progressive fringe of the Democratic Party. (Can you say Detroit?)

      First of all, in a free market society, its Exxon/Mobil’s right to not upgrade its plants. And why should they? Immediately after they dump millions of dollars into plant upgrades the new environmental “flavor of the month’ policies in California will be put in place and they’ll have to do it again. Second, the Progressive Liberal party of California will NEVER be happy with the oil companies so why should E/M invest in a hostile environment. What the Progressive Liberal party is doing can be equated to going into a restaurant, insulting the chef, owner, bartender and waiter and demanding they serve you differently than the rest of the patrons. Then when you revisit the restaurant you’re wondering why the employees are hesitant to serve you and have a standoff attitude.

      Second, you state that SoCalEd completely disagrees E/M’s take. This is also complete bunk. The SoCalEd representative stated that “How that condition affected the refinery is not known to us at this point in time.” He did not say that SoCalEd is placing the blame for the outage on E/M. But distorting the facts is a typical Progressive Liberal’s tactic, isn’t it Tyler?

      Working for an electrical utility I’ve personally had to deal with power quality problems like what this one sounds like it could be. It is standard utility practice to not accept fault for any problems that occur, otherwise the people that want free money come out of the woodwork and the list of claims goes through the roof. And utilities… read more »

      …know that without data monitoring it will be almost impossible to prove what really happened. Most theories are just speculative.

      I have a Bachelor’s of Science in Electrical Engineering and work for one of the largest electric utilities in my state. I’ve worked for electric utilities for more than a decade so I would be considered an expert in court and I would agree with what Steve Perlosky wrote below. This is a common problem with sensitive equipment and unfortunately, there is no cure. One thing E/M could possibly do is pay for redundant lines to be brought in from different substations and install very expensive switching equipment. But once again, why should they invest millions of dollars in this one refinery only to have the Progressive Liberal party of California outlaw the refinery? Also, I say possible as I have not seen their equipment and don’t know what they have to deal with.

      To sum up, you made your bed, now sleep in it!

      As a side note, I also find it pathetic that Progressive Liberals like you always complain about the greedy, evil oil companies when prices go up, but never happily write how generous oil companies are when prices go down. Typical polarizing Progressive Liberal party of California.

      • martin King says:

        The free market is the problem as it always is. Why should we upgrade which will cost money!! Let’s just pay ourselves more and more and when there is a problem we will make the customers pay!! Corporate scum at their lowest

    • Robert Builder says:

      Mr Harvey, you may not like it, but the laws of Sacramento do not over ride the laws of economics. You recognize that the regulations impose a cost, then complain the company refuses to pay that cost. There actually is a free market solution: If you think that the regulations are conducive to building new refineries, then you go do it. If you are right, you will have an advantage over competitors and make a lot of money. If you are wrong, you will go bankrupt. Don’t complain that others are refusing to do what you refuse to do yourself.

      Be grateful there are still any refineries in California. I lived there for 26 years and started a business. Things got so bad, I laid off 90% of my California staff and moved to Texas, where business (and oil) is treated as the hero, not the villain. Gas today is $2.96. Electricity is 9c/kWhr. There is zero state income tax and a lower sales tax (state+local). Property tax amount on comparable homes is lower (due to lower basis, not rate). Crime is low (safest city in US is Plano). Excellent public education can be found in affordable areas (#1 public high school in US is in Dallas, California public education is ranked #49 among states). An excellent quality of life can be had by middle class (McKinney #2 Best Place to Live). And many Texans carry guns on them, even into the State Capitol Building.

      From your opinion, please, do not move to Texas. We don’t want people like you. Business owners, rich people, and hard working middle class who don’t want to be nannied are welcome.

      • justin jay says:

        Robert half my family is already over there! When I decide to raise a family I’ll be moving my small business to a more pro business state. I used to be a strong liberal in college but opening a business for yourself really opens your eyes to how unfriendly California is to their businesses! When will this state learn government jobs don’t help the economy or help produce exports!!

      • Steve Marin says:

        The comments about Texas being some sort of Shangri-La always make me laugh. I took special note of the “no state income tax” argument that always seems to come up perennially when Texans want to thump their chests about whose state is better. The lack of an income tax is a bit of a farce considering that Texas has some of the highest property taxes in the country for a Southern state. I also thought the commenters a bit too rosy a picture of Texas’ supposed quality of life. Sure, Plano and The Woodlands are nice if you can afford it, but most Texans don’t make six figures, so that’s a moot point. Plenty of crime-infested ghettos in Texas too, not to mention that outside the handful of cities, most of the state is uninhabitable. And Christ on a cracker, who would want to live in some awful little place like Midland? But taxes, crime and quality of life aren’t the scope of this blog – a self-serving opinion piece written by an oil company *ahem* – and the comments which followed sort of just wandered into the weeds.

        It’s true, California has some very stringent policies, and for good reason; our national dependence on fossil fuels have led to some unfortunate consequences such as polluted air and freshwater. You don’t need to be a tree-hugging liberal to want clean air and water, do you? It’s actually quite remarkable that air standards have improved exponentially in Los Angeles and the Bay Area versus 20-30 years ago. Contrast that with Texas, specifically Houston; the air, in my opinion, is toxic. Every time I land at Houston-Bush, the aircraft descends through this greenish soup-like pollution and the smog permeates every corner of the metro area. We will have an even better understanding of… read more »

        …what effects such has we monitor incidences of disease in the years to come in Texas’ oil-friendly towns.

        I won’t dispute that Texas is more business friendly: in fact, the Lone Star state actually writes large corporations checks to relocate their businesses to Texas. And with the petroleum industry subsidizing so much of Texas’ state budget, Austin politicians have the luxury and the money to do just that. But take a look at the trade-off. I would like to see California take some steps to be more competitive but not at the risk of destroying the environment. Again, read: the air you breathe, the water you drink, so on and so forth. I should also mention that recent studies also noted that obesity rates in Texas are amongst the highest in the U.S., as is depression and use of psych medications. Coincidence? Maybe, but regardless of your views on global warming and the like, you must recognize certain uncomfortable links. This shouldn’t even be a Left vs. Right issue; if you have lungs, you should want to breathe clean air. So, as for the whole quality of life comparison, I’ll begrudgingly pay my high taxes and a couple extra cents at the pump and then take that deep breath, because after all, I’m not in Texas, and I certainly don’t swallow opinion pieces written by oil companies.

      • Magila Gorilla says:

        One more amazing fact about Plano is that during the aftermath of Hurricane Katrina Plano (a city of 200,00) welcomed 25,000 displaced New Orleans residents. We provided them top quality housing, our great economy provided them with good jobs, our excellent public education system took in their children with no tax increases, and almost none of them left. Our apartment vacancy rate went from 40% to less than 5% overnight. Our housing market ended up healthier, our economy grew, and we used the principles of private enterprise to integrate this massive influx of destitute people into our community profitably for all involved. This is the true meaning of the American Dream in action, and California would do well to learn from our example.

        • bn bn says:

          An even more amazing fact is that California is the top recipient of refugees of any state. The reason why the Federal government chooses California over most other states to settle refugees is due to its sophisticated social and public services and related infrastructure, as well as the fact that it is the most diverse state in the country. Texas on the other hand, has neither of these things and being that it is a net-recipient of Federal dollars (i.e. Federal dollars make up a sizable majority of the state budget), it was that plus additional Federal handouts that helped pay for Katrina victims and had nothing to do with Texan “goodwill” or the “American Dream”. If anything, Texas is known to be hostile to public spending on social and public services, as well as refugees (which is why you have minutemen on the border shooting at innocent victims crossing from Mexico for a better life, as opposed to Californian civilians which go out and place food and water along the border to help preserve the lives of refugees, because they believe that the preservation of life is more important than the politics surrounding “illegals”).

      • bn bn says:

        If Texas is so great, then why does California still have a higher per-capita income than Texas? And if you look at major cities in California, they trounce Texas in per-capita income. Furthermore, if California was such a “bad place” for business, why does it lead the nation in the number of Fortune 500 companies based there? Why was it the #5 fastest growing economy in the country in 2013, at one point creating more jobs than the next 10 states (including Texas) combined (and it’s worth noting that the the majority of the states that grew faster were all oil-boom states). Why is it that California receives nearly half of the entire world’s VC and that a single city such as San Diego has received more VC funding than the entire state of Texas? Why is it that California is always setting trends for the country (and even further) in almost every sphere and is the top innovation state in the country, and not Texas? Why is it that 15 states plus foreign countries regularly coming to California on their knees with their hands out, begging and hoping to get California’s economic scraps and score some Californian investment and expansions into their states, so that they can help transfer advanced knowledge over, become more innovative and create jobs? Is this not actual proof and admittance (from states such as Texas) that California is superior economically, the economic and innovative engine of the US and thus its economic spill over effect reaches far and wide? I don’t see any states or countries coming to Texas.

        So before you go and parrot the typical GOP/Texan lies and exaggerations and cherry pick facts to best suit your political agenda, let’s remember also that: Texas has the highest/one of the highest teenage pregnancy rate,… read more »

        …high school drop out rates, most regressive and unfair tax system that hurts the middle class and poor, one of the highest inequalities amongst populations, no/low-quality public services, policies of taking public money out of schools to bribe companies to move/expand into the state (the only way it can really attract business/transfer knowledge), the highest number of people with no medical insurance (25% over the entire age group), the 2nd highest per-capita municipal debt in the nation (and growing at a frightening rate), the 5th highest state per-capita debt in the nation, environmental pollution growing at a rapid rate due to lack of regulations (e.g., due to lack of concern from oil companies and the Texan government after citizens in Parker County, TX complained about methane in their water supplies, the Federal EPA had to step in with emergency orders…what kind of state places oil companies first and the health of their environment and citizens last?), vast swathes of Texas are so destitute they are more akin to Somalia…let’s stop bloviating and keep things in perspective.

    • justin jay says:

      I literally laughed my a## off at this comment. Get your head out of clouds! Were refining oil with outdated machines!!

    • Jonathan Lackman says:

      Tyler; if you want to only deal with companies who eschew profit and make no money in the process, you will be dealing with the dregs of business. So SCE disagrees; so what? That doesn’t mean Exxon is wrong, it just means there is a disagreement. You also ignore the other valid points, like the fact that California has to have “special” gas, they can’t just use the same as is floating around the other states. They have “special” cars, with “special” emissions, trying to prove they are “greener” than the rest of the US/World. Well, there are costs associated with all of that, and you can’t say Exxon did it. Thank goodness there is a state like California so the rest of the county can see what happens if these policies are followed and thereby avoid the same fate.

  4. Larry Adams says:

    California voters need to rein in the California Air Resources Board… start with an initiative for voter approval which requires the CARB to allow the use of gasoline and diesel fuel which is available in all adjoining states, and abolish the mandated summer and winter formulas which cost any more than fuel in adjoining states, or which is not available in adjoining states. Second, penalize the oil companies for closing refineries to retool for summer and winter formulas if they do not have sufficient reserves to last at least whatever length of time it will take to retool the refineries PLUS at least four weeks beyond the projected retooling time… Third, abolish the monopoly that one company (Unocal?) has on the summer and winter formulas and require that the company share the formula at a cost of no more than one cent per gallon; I believe Unocal is getting 20-25 cents per gallon for their monopoly on the state mandated formula.

  5. Scott Gellner says:

    Give me a freaking break, Exxon. This is such garbage. You’re too cheap to upgrade your equipment and want to make the liberal state of California suffer to prove a political point and flex your muscles. All “supply” shortages in the world for fuel are created by YOU, and the rest of the cartel, that artificially inflate prices by decreasing production and closing refineries. You rob our globe of natural resources and pollute our land in the process, and rob our pocketbooks of cash. You make record profits year after year, recession or not, while the rest of us suffer and can barely afford to fill our tanks. Turn some more spigots on, you greedy profiteers! And quit crying because some state is finally holding you accountable, soon the rest of us will too.

    • Bruce Walberg says:

      Did you learn this point of view in High school. I only ask because you sound like all the other misinformed children in this state.
      I like it how you want more from Exxon, but don’t want to pay for it.
      Did you know we live in a global economy. The price of oil is not in the hands of a few executives at a BIG BAD oil company.
      Just to review. According to you Big Oil BAD! Please pump more now!
      Go online or werevever you can and look up Gas taxes in California and tell me how much of the price of your gas is TAXES!
      Then you will finally see who is stealing from you.
      Also. Try running a modern economy with out it! See you in the STONE AGE!

      • Jon Do says:

        I couldn’t agree more. Oil is a global market. I have no doubt you are an Obama supporter Scott. Tax the wealthy and the big corporations to death til they move all their jobs overseas. Yep. We got all their money. And now they are gone. And the jobs with them. Its very easy to blame those who have everything like the XOM execs. But what is the root problem. California is making it more and more expensive for companies to operate there. And the cost gets passed on.

      • Bill McBroom says:

        Exxon Mobil’s 2012 Profits Just Shy Of Breaking Global Record

        DALLAS — Exxon Mobil Corp. said Friday that fourth-quarter earnings rose 6 percent to $9.95 billion with help from higher refining profit margins.

        As CNNMoney notes, the company earned $44.9 billion overall in 2012, just $300 million short of the world record.

        • Robert Siegmund says:

          That’s appropriate. Can you think of any company that’s done more to better mankind? I guess you could argue for Pfizer but at that level, it’s kinda academic.

          That’s why capitalism works; those who provide the best of what we need and want, win. Simple as that.

          I hope 2013 proves to be even more profitable for them. They’ve earned it.

        • David Deal says:

          A better indicator than profit is ROCE-Return on Capital Employed. In other words how much return did you make on the money invested. Companies do not stay in business unless they make a return on their money. Profit is not a good indicator. ExxonMobil can report a huge profit but if they only made 1% on the money invested they will not be in business long. Oil Companies invest lots of money – like $200 million to drill an exploration well that finds no hydrocarbons. I wish the SEC would make companies report ROCE, then you might find that oil companies are typically in the 12-16% range while pharmaceuticals, banking etc are much higher. The only reason their profits are not greater is they did not invest near the capital that EM did. Hope this makes sense to some of the folks out there complaining about high profits. Without those profits how long do you think EM, and other oil companies, would stay in business. For all those folks complaining in California, particularly the wealthy, I would suggest parking your jets and expensive sports cars and investing in a good team of horses and a stage coach.

    • Joseph Moore says:

      You cite the Oil companies for the high price of fuel. While you guys are paying almost $5 a gallon for gas, us here in Georgia and Florida are paying more around 3.15 a gallon for gas. You should be going after the idiots you have running your state for pricing gas out of the reach of the general public

    • Gary Fields says:

      Scott, Maybe you don’t realize this but other companies can invest in refineries and infrastructure to supply gasoline. You, yes you, can put your own money into a venture to refine petroleum and sell gasoline at huge profits- why are you not getting into this? You want someone to fill your tank and “turn on the spigots” yet want them to do it for free. The production of petroleum, refining into usable products, and transportation of it is an incredibly complex and expensive business. The fact that you like the availability of these products shows you enjoy the fruits of their labors. While you may see they have large profits you don’t see the investment needed in this industry. Compared to most industries the investment to profit ratio is not really that good. If you don’t like what it takes to produce, refine, and sell petroleum products may I suggest you simply stop buying them. If enough people stopped buying them then companies will stop producing and selling these evil products.

  6. Jeff Winkler says:

    I gotta say. The left coast is getting what it asked for.

    Between the ridiculous and unnecessary mandates on fuel to the pencilnecks that whine about the power lines interrupting their view of the ocean, it’s obvious that Californians just don’t have the grit to live any better than the less leftist rest of us.

    If California is so much better than the rest of us, tell me why, in Dallas, when I extend my middle finger from my sunroof I can insult at least 5 Californians at once? Stay there. You deserve your state, and your state of affairs.

    Exxon has been doing a great job of making constant and continuous improvements. I hope you keep pushing for CNG vehicles, or synthetic gasoline. I wish Exxon would pull out completely from the California market. They don’t deserve the additional choices you provide. Let California fail with useless Volts and unsafe priuses.

    Full disclaimer: I don’t work for Exxon and I don’t like Californians.

  7. Bruce Walberg says:

    In the land of fruits and nuts the crazy man is KING!
    California in it’s never ending drive to be AWESOME and BETTER THAN,has stepped on it’s ding a ling again.
    The winter/summer fuel is a scam from day one.
    The idea that if we just squeez the drivers just a little bit harder until they just give up the freedom of driving your own car, we will somehow be a better place is NUTSZ. It is killing more people by forceing them into smaller more dangerous cars, and forcing us into smaller and less “multi purpose lanes.
    As we sit parked in the lanes we watch people drive by us in the HOV/Troll lanes. Nothing like paying for something you will never be allowed to use.
    This whole “Look at us, were California and we can get or residents to jump through all these hoops just to make US look like we care”
    It’s time for these idiots to just go away! Were tired of your lies, holier than thou mind set. Replace it with people elected by US! Not some junior putz who “KNOWS” better than the dumb residents.

  8. Anastacia Nemec says:

    I grew up in Los Angeles in the 80′s and I remember the brownish yellow haze that hung over the San Fernando Valley. I also remember smog alert days in high school when we weren’t allowed to have PE outside. Most of the time we were unable to see the Angeles Crest mountains at the North end of “The Valley” and I can to this day recall the disgusting stench. I am a “valley girl” still to this day and twenty some odd years later I can see those mountains every single day of the year. I would gladly pay a little extra than the rest of the nation so that that stinky haze never returns. Everyone should know that in twenty years or so the regulations we have in place here in California have made a difference. There are those of us who actually witnessed the change over time as proof that it IS possible to make positive environmental changes that are good for people and places. Those of us who were here back then are charged with sharing with the transplants to our great city what it used to be like here, what it is like now and how it should remain. The oil companies should quit whining. They make billions of dollars a year, billions. Yet, it seems that will never be enough.

    • P Linx says:

      Your real problem should be with God. The smog and air pollution in California is solely due to where these cities are built. That is why cities in other states that do not have the same geography as California do not have the same problems. You are welcome to move and people that do not live there should stop complaining. Just stop asking for federal money to fix California problems. Same goes for swamp cities like Boston, New Orleans and New York.

    • R. Solene says:

      Respectfully, I think you have it wrong: it’s not the oil companies that are whining, it’s California consumers and politicians who are whining. The oil companies will make their profit margins, which are simply added to the cost of producing/distributing the product. They are not going to complain until consumers and the politicians those consumers elected turn on them for the high cost of gasoline. I think it’s splendid that the air quality in California has improved so much and you seem to be very appreciative of this improvement. You just need to understand that there has been and continues to be a cost for the improved air quality, and a big part of that cost is reflected in the prices you pay at the pump. California consumers and politicians should understand this connection.

    • Daniel Richardson says:

      Ahhh finally Anastacia, a response that made me go through the third world sign up and login process.
      No doubt, the “leaders of california” heard the voices of the people who lived in Los Angeles during the 1970s and got on board with clean air REGULATION. They didn’t worry about cost to gas folks because that wasn’t their aim. I remember the brown haze and recess cancellations all too well.
      The trade off has been higher gas prices. I think I struggle with them more than you do…

      The second part of the equation is getting more refineries and what concerns me is that no experts in the field can seem to make a good go of it. We are stuck with the finite number of refineries that we have here in California. This is concerning. The state needs to waive the restrictions on a new plant that can make profit until it has the money to invest in expensive clean refining technology (that’s my two cents).

      Dismal, bitter Jeff Winkler – please stay in Dallas. Please suck in your 100 degree air for fifty days in a row at 80 percent humidity, please stay there. You probably don’t know the thrill of great mountain biking or surfing overhead waves in your backyard. You definitely have not snow skied or snowboarded AND surfed in the same day. Although we will pay more for gas, we will continue to lead the world in clean energy technology innovation. A great resource for future generations.

  9. Matthew Ward says:

    I realize that prices are high, but growing up in Los Angeles during the 80′s the air was so bad that my lungs would sometimes hurt. I’d pay $10 a gallon to prevent my children from being exposed to that!

  10. jules rosen says:

    Definition of crazy id doing the same thing over and over. Most greenies would like to see gas at $ 10 a gallon. I however would prefer a California with better mass transit , more mini trains a better gas enjine that burns cleaner .

    What most people don’t understand is that gas prices are one leg of the economic triangle , Their prices go up – we have inflation as well as a poorer economy.

    California has had smog since the first car was made but not much has made it better . 2 lane express that by passes LA is one idea . electric taxies are another from multiple train lines . to allow you to leave your car at home.

    • randy Renfro says:

      If you think you have all the woe is in California get this.North Pole,Alaska has an oil refinery.We pay 20-25 cents per gallon more than Fairbanks,15 miles away.The Trans-Alaska pipeline runs into the refinery with a spur line.[no second party transportation,going to Valdez anyway].We get charged Seattle market price, plus what it would have cost to ship gas from there to here! $ 4.19 in North pole,a mile from the refinery.20-25 cents more than the gas in Fairbanks that is trucked there.Whats wrong with this picture?

    • frank apnea says:

      Getting gas up to $10 a gallon is tricky. If you do it too fast, you can create a real recession, real problems and ultimately a transition away from heavy fuel use. That would be a disaster. It might result in a dramatic shift away from oil that would ultimately destroy the business. It would mean radically reduced COPD, cancer, asthma, all sorts of things that a huge lot of people rely on for income – GSK, MRK, Sanofi, Bayer, probably five million employees worldwide including medical staff that administer the drugs and another half a million investors into the shares for a lot (say starting at $500,000, but up to $5 to $10 million per investor).

      The key is to ratchet it up slowly and suck up the money without creating a crisis. If you would have told people in 2000 that oil was going to be $100 a barrel and gasoline $4.00 to $4.25 a gallon in the US, they would have told you that the world would end. People would be stranded and stop driving. The economy would grind to a halt.

      But it didn’t happen.

      Instead we have people making $50,000 a year who drive giant farm-worker mobiles – trucks that are heavy and bouncy but with nice leather seats and a decent stereo and lots of ordinary middle class people think that those are desirable – like conspicuous consumption. The lower classes are into tattoos and trucks and baseball caps. I love it!!! But seriously, I know people who make $50,000 a year and spend $8,000 a year on gasoline. They don’t even know it. They have two adults driving Chevy Tahoe trucks and one commutes far to work while the other drives around to run… read more »

      …family errands – groceries, etc. They spend 16% of their income on gas. And poorer people and middle income people tend not be able to afford to live near work, so they live in these big tracts of houses in the middle of nowhere and commute 20 to 50 miles each way and because they don’t understand math, they have a truck that is uncomfortable to drive and is bouncy and goofy, but these people can’t tell the difference because they’ve never driven a nice car – like a nice sedan that is genuinely comfortable with good suspension – and they spend 16% of their income on gas.

      I want to bring that number of up to 25% and I want to do it over seven years. I want the profits to go to US companies (and British and Dutch too because they are our allies). But it’s a free country and if people want to live like that, I say, “Thank you so much for putting my daughter through Stanford and funding my trips to Europe!!! Thank you, thank you thank you!!!”

      Americans can and will pay more for gas. They can just charge it or take out a home equity line of credit. The only thing that will bring prices down is if we have a serious market crash and recession and that would seriously be awful… for me, but not just for me. There are lots of house cleaners and waiters and waitresses and mall employees, car wash attendants, etc. who rely on me for income and if my share prices drop, those people are going to become desperate and maybe homeless because I will cut back. So y’all better hope that oil prices don’t fall all of a sudden.

  11. chris lysen says:

    101 ways fleece the consumer. The oil companies must be nationalized or most of us will become slaves of the industry. In 1972 I paid 26 cents a gallon. Oil is sold while still in the ground. By the time it reaches you, it could have a number of owners, each demanding their tribute. In order for the greedy to get rich, a part of the planet must die. Karma is immutable, if you haven’t heard. Those that pilfer won’t like where their next life will be.

  12. jules rosen says:

    Okay for all you complainers . Refineries are A) the biggest most capital intensive industrial objects excluding, cruise ships, atomic power plants .

    B) AND Have no guaranteed profits by government like utilities or some other regulated industries.

    Further no new plants have been built in years due to government regulations.

  13. jules rosen says:

    If the state would let cities like Los Angeles had invested their gas tax dollars in mass trans the last 50 years there would be no need for special California gas and then their would be a national gas market .

    By the way the north east has a similar problem – its caused by heating oils need of refineries being switched over for heating season

  14. Louis Loizides says:

    Seriously… Exxon tells you “we have to charge $5 per gallon because of the government” and people on here really believe them? One commenter on here is even blaming liberals. Seriously…? Let’s be clear – any business will sell you their product for whatever price makes them the most money. The price ANYTHING is sold for has nothing to do with what it costs to make. This is true whether the thing you’re buying is a piece of jewlery, clothing, or oil. The reason gas is $5 a gallon in California is because people in California still buy a ton of gas when it’s $5 a gallon, so why would Exxon sell it for less? It’s really that simple. And they have every right to do it. If you’re going to have to get everyone to stop buying so much gas… which probably isn’t going to happen in the near future (maybe when there’s another recession, which is why gas was so much less in 2008).

    • Robert Siegmund says:

      “The price ANYTHING is sold for has nothing to do with what it costs to make.”

      Seriously? I’m guessing you haven’t much economic teaching because you couldn’t be more wrong, EMPHASIS notwithstanding.

  15. frank apnea says:

    I have shares in GSK, MRK, BP and a few other companies. The fact is that everyone is going to die eventually, but these liberals keep wanting to limit air pollution. I have had friends with cancer (a lot of which is caused by air pollution and evaporating benzene from gas stations, especially childhood leukemia) and they went through the rigmarole of Terceva, chemo, radiation, rinse, repeat. Then they died. But they had hope and that kept them going. And now they are in a better place that has streets paved with gold, which certainly means that you have to drive safely because it’s slippery!

    But the point is that there are a lot of great British, Swiss, French and American companies that have huge shareholders (I’m a shareholder), and lots of public pension funds, etc. 20% of the US economy is now medical-related. The fact that most liberals don’t get is that if you significantly reduced air pollution, you’d push the country into a very long recession. Stupid people say, “Oh, well, if people didn’t get cancer, they’d be more productive, they’d spend that $500,000 to $1 million on shopping instead of cancer treatments.” That’s ridiculous. People don’t spend money as wildly as when they think they are going to die. You could never stimulate spending on tchotchkies that is equal to what someone is going to spend because they mistakenly believe that their cancer treatment is going to save their life.

    I know the whole thing is a racket, but when I get cancer, you’d better believe I’m going to spend whatever I have on treatment even if I know it has a very low likelihood of being successful. That’s just inevitable. You’d have to be a weirdly strong… read more »

    …person to not do it.

    1 in 3 women and 1 in 2 men in the United States will be diagnosed with cancer in their lifetimes. This may seem awful, but it’s because most people don’t understand economics. If you reduced those numbers, there would be a huge huge debilitating recession.

    Lastly, I drive a Prius. But I’m no liberal. I get dividends from XOM and BP. I’m like a bartender who doesn’t drink the profits. I sometimes egg on idiots driving Chevy Tahoe trucks or giant raised pick up trucks. I cut them off on the freeway or speed up and they are like little kids and they drive off at 90 miles per hour in their giant truck, which I know is right then getting about 9 mpg and I settle back into a 50 mpg 70 mph cruise.

    Most Americans also think that domestically produced oil and gas will be sold with some sort of “patriot discount” to Americans. It is wonderful people think that because it keeps them driving these huge trucks around. The fact is that XOM just like BP sells at the world’s market price. If Americans won’t pay the highest price, US oil companies will ship the oil to China where there is a new prosperous middle class of 300 million people who want to bid on oil and gasoline against Americans for their new auto powered lifestyles. I would personally show up at a shareholder’s meeting if XOM or BP started selling gas at a discount to Americans because that’s communist.

    The fact is that oil is going to go up and up and so is gasoline. And even if they pump it out of the ground in California or Texas, Americans are going to pay the same spot price as in Shanghai, Tokyo, Dubai, Riyadh, London, etc. The US has 4.5% of the world’s population. There is no way that many people are going to control the price. And the US is using less oil and gasoline now than it was eight years ago while China is using way more.

    We should focus on getting more Americans to drive bigger cars to maintain the heavy consumption here. Maybe we could create a fashion trend for people to tow things behind their cars like carts or boats or campers or something to and from work, just leave the things attached all the time like an “accessory” that is conspicuous consumption for the lower classes or something. Just like SUVs and big raised pickups – if it weren’t for people using 7,500 pound trucks to move their 150 pound bodies from home to work, etc. I’d have to work to put my daughter through Stanford rather than collecting dividends when mathematically challenged people gas up big trucks. I love it! I’m going to encourage the exuberance of another raised Ford F250 driver on my way home from work today. Watch that big plume of exhaust as I prepare to get my Terceva profits as some new 14 year old’s parents pay $6,000 a month for those beautiful little pills.

  16. Jon Do says:

    Definitely self inflicted. I drive tractor trailer and by the end of this year I can no longer take my truck in the state. Its too old by their emissions standards. Its a 2007. Ancient.. right??. F em. I know I’ll never take anything over there. Buddy of mine owns 5 trucks and he says he will never go back. Its catching on. See how California does when enough trucks quit hauling freight in there.

    • john mullally says:

      Misconceptions:
      1. When I last looked, the average Californian does not consume more than U.S. average on gas for autos.
      2. The average Californian uses a lot less energy than the average American because of the good weather.
      3. California has been targeted by Energy concerns.
      a. About 10 years ago a fake electricity shortage was engineered by Enron around Christmas (non-peak) with bogus shutdowns and California had to buy electricity from as far away as British Columbia. I am a republican and I still angry that Bush did nothing.
      b. Not the first time Enron engineered a crisis. In 2000, my father bought Natural Gas (he uses a lot) for his Powder Coating business through a contract with Enron. Later that year, he was forced to pay triple the going rate for Natural Gas (that he would have paid if he had stuck with PG&E). Screwed by greed under the guise Deregulation.

      Having grown up in California with asthma and being affected by the horrible air quality (stinging eyes, in some cases not able to take a deep breath) in the 60′s, I cannot find fault for what I believe California is doing as far as taking reasonable steps to minimize air pollution. There is a difference between paying extra because of the extra cost of doing business due to regulations and being screwed because unethical business men see a means to make a windfall through crafty design and exaggerated claims.

  17. Dyn Blin says:

    Perhaps someone can help me understand:

    If our market is closed, not allowing a leveling of supply and demand, and the article’s premise is that because of this, petrol companies have their hands tied not being able to keep up, the Martinez refinery has enough CARBOB to export to Chile even after someone incurs the expense of reserving two tankers to make the trip from Peru?

    I don’t feel much better with the implication that others are being equally exploited, but maybe I’m missing another fundamental premise?

  18. john bergman says:

    California now has cleaner air because of our gas standards. So The question to you is would you like to suck in a lung full of today’s air or air from 1970? What Exxon really needs to do is make the California formula nation wide. That is if you care about the health of the planet.

  19. Bill McBroom says:

    James Reid….Yes Has NOTHING to do with the refiners NOT wanting to spend the money to upgrade the ir refiners to a better standard…get off the koolaid man

  20. Jeffrey Ehrlich says:

    The root of the problem is that we are using a fuel which pollutes our air, and will raise the temperature of our entire planet. Compounding this is the fact that oil companies are out to maximize profits and would rather spend money on a propaganda website than spend money to increase the availability of fuel. I wanted to live in L.A. in the 1970′s. I was offered a wonderful job when visited the city for an interview. Unfortunately, I was unable to breathe the air in L.A. without becoming sick. Even if higher fuel prices were entirely the result of cleaning up the air they would be worth it. Unfortunately, many people are unable to see problems until they are so big they cannot be ignored. They ignore the fact that fire season comes earlier and lasts longer and causes more damage, while other areas of the country suffer from both floods and droughts. Record high temperatures year after year are ignored, or the occasional record low is paraded out as if one new low is parity for the huge number of new highs. Storms like Sandy are somehow disregarded. Rising seas and melting glaciers seem not to matter. Instead, the feel that “…’energy problem’ like all problems… is liberals.” I cannot understand what kind of thinking, if there is any thinking at all, can discount the dire warnings of over 90% of the world’s climate scientists, as well as the changes in our weather over the last 30 years that are apparent to anyone who has been watching, and not want to take action to avert the impending catastrophe. How can conservatives not see that oil companies stand to lose TRILLIONS if they must stop… read more »

    …selling carbon products in the future. They are going to do everything they can to make sure that there is no change. They have taken the path cigarette companies chose 50 years ago. Deny and obfuscate the science. Sell the product. Sell, sell sell. Cigarettes don’t cause lung cancer and fossil fuels aren’t causing global warming.

  21. gordon townsend says:

    Ken asserts the facetious notion that traditional supply and demand have something to do with prices in California. This is cryptoeconomics at best. Demand is constant and can be charted – there is literally no sustainable spike in demand related to prices. Price is driven by state government intervention relative to supply – taxes, fuel mixtures, etc. and federal government intervention (middle east policies, taxes, etc.). The price at the barrel head is driven by futures traders responding world government actions and greed driven by their compensation systems. Californians issue is that state government has made refinery glitches become economic brakes for the middle class in the state. It is critical in the 21st century that we develop beyond simplistic thinking and begin really looking at value impact. What environmental laws are actually working in creating an economic or social benefit and does any benefit outweigh the opportunity cost?

  22. Lucas Rosa says:

    The market is adjusting which is exactly what you and yours are afraid of. It’s adjusting towards sustainable forms of energy, it’s adjusting towards more fuel efficient machines, it’s adjusting away from a world where energy companies like Exxon are able to pass the enormous social and environmental costs of their business onto society while collecting insane profits. Sorry but you guys are quickly becoming dinosaurs (haha) and your ability to control the political machines of this country are numbered. It’s hilarious to hear an oil exec cry about the actions of politicians when you have been spending billions to exert influence over these same politicians to the detriment of society for decades. Your qualm isn’t with the system, it’s with your increasing lack of control over said system. Nice propaganda piece however, though with the vast resources of your company I’d have expected something a little less transparent

    • martin King says:

      Very true
      Here we have Exxon as usual blaming everyone else but themselves and their greed. Big corporations have destroyed the public transport system everywhere and the Kochs are still doing it. California has sat back and allowed them to do this with impunity. I long for the days when these companies are no longer needed and their assets stripped from them

  23. Terry Melvin says:

    There’s nothing wrong with requiring good, responsible environmental laws. But when you have Socialist/leftist idealogs such as those in California writing and enforcing laws that are completely overboard environmentally, as well as harmful to the state’s economy, then you’re going to have, as this article points out, self-inflicted crises. Now those same idealogs want to investigate the oil companies for charging what they must, in order to at least sell fuel at a reasonable margin.
    I think the best solution might be is for all the energy companies to pull out of California, and do no business with that state, until those legislators see the error of their ways or the people rise up and demand real change from a state government that truly doesn’t have Californians at heart..

  24. don hay says:

    Wow, the media is digging up articles from 2012. In reference to that delimma,… political elites making stupid gov’t policy!. They will never solve the California energy/pollution problem until they solve the stupidity of large numbers of immigrants that come to California every hour. Most people don’t even know how many “legal” immigrants are allowed in the U.S. each year. But, before you check for that info…set a number in your mind, as to how many you think the U.S. should accept each year. Then check out the real numbers, and most people will be blown away. However if you like that number, invite them all to live in your house with your family, while YOU can pay for all their “needs and wants”. But, then…don’t complain to me about the problems that… will… result… in your house!

  25. Sean Portwood says:

    I as a California native am more than happy to pay a higher price to support ecological, and safety laws in my state. The rest of the nation should be following the model. We should be weaning ourselves off of oil dependence. Lowering our exposure to harmful environmental effects of the use of petroleum and diversifying our methods of making clean energy. Poor examples in recent memory are Louisiana nd Alaskan oil spills. South Dakota is in for a shock from its fracking and water supply.
    Getting to drive your car an unlimited number of miles and thinking there is no cost is ridiculous. Gas should be twice the cost and clean public transportation half the cost.

    • Michael Myers says:

      Well Sean, let me guess. You live in an area where you do not have to drive very much. Most of us living in CA do not. For the rest of us, trying to earn a living in a State where its very difficult to do this, and we are dependent on our automobiles to do so, you might be able to guess that we do not agree that gas should be “twice”. We don’t agree that it should be what it is. I really do not like paying about $12 more each time I fill up than people in neighbor states pay. That is about a hundred bucks a year more. We are not making a choice to drive. It’s a necessity. We don’t drive, we don’t eat. It’s that simple. Some of us earn about the same (or even less) than we did 30 years ago, except the dollar is only about a quarter what it was then, and we pay 8 times as much for the gasoline to try to earn this money. So if you want to pay more Sean, by all means. But as for me, I’d like it if the state changed things, or at the very least, suspended the rules in times of crisis, such as is described in this article.

  26. jeff miley says:

    I’m happy to pay the extra 80 cents or more per gallon. I grew up in this state. I spent my child hood choking on thick brown smog, not being able to see the mountains behind my house, and ending every smog alert day with a pain in my chest every time I breathed in too deep. Our fuel has stricter standards, so we can’t use fuel brought in from other states. There are nearly 40 million people living here. We have to have different rules.

  27. Jimmy Ingersoll says:

    California has historically had a love affair with the automobile. The shame is that the entire state must suffer for the driving habits of its largest cities. The energy problems will not be solved, or at least reduced, until those habits are dealt with. This problem is similar to other policies that have been adopted by California politicians, and that is the root of the problem.

    • mayvon fartin says:

      Love affair? Driving habits? Shame? Are you insane? The “energy problem” like all problems in this country is liberals. The regulations and wasted money on taxes are the problem. There is no “energy problem”.

    • Tony Verreos says:

      Most people who have ever driven love the freedom. The failures we have are failures of urban planning, and lawmakers who act like CA is independent from the rest of the economy. Energy companies have failed epically in the area of safety and upgrading refineries proactively. To the extent the pricing is a CA only problem, the explanation is OK, with one catch: The farther you are from the refinery, the more you should be paying. That’s not the case here.

      I see oil companies as the good guys who make our current way of life possible. I see politicians as the problem makers, not problem solvers.

      • justin jay says:

        Unfortunately the left majority of California (not saying I’m not one) hasn’t allowed the energy corporations to upgrade or build new refineries… The minutes one gets proposed, there’s normally a huge outrageous…. I hate to say it but California needs to make a shift to make it more business friendly. Until a proper fair balance is found…. We’ll be refining oil in 1970 plants

      • Magila Gorilla says:

        Tony your logic is correct, but your are neglecting the incredible transportation efficiency of pipelines. The Colonial pipeline can move a gallon of gasoline from Houston to New York for about a nickel. It literally costs more for the truck to move a gallon of gas from the local terminal 5 miles to the retail station, than to pipeline the gasoline 1,500 miles from the refinery to the terminal. The cost of transportation is included in your pricing, but it is usually based on trucking from the terminal to the retailer, not from the refinery to the terminal. (By the way oil compaines often share pipeline resources in areas where only one line serves a market to ensure competitive pricing) Of course proper pipeline infrastructure is critical, but most of the lines we use today were built before 1970.

        • PEte Swarr says:

          You really are just hurting your own opinion. Yes, they could build the refinery thousands of miles away and pipe it to CA, but that still costs a lot of money. It is still cheaper to build the refinery close to the users I am glad I have been deployed to South Carolina where they like businesses and gas near me costs as little as $3.06, still an outrageous cost.

  28. Patrick Kelly says:

    Just wait until the Low Carbon Fuels Standard is implemented. If California is its own island today; under a LCFS, it will soon be its own planet.

  29. Tyler Harvey says:

    You failed to follow up on this. The latest data show that supplies were only limited because of gross market manipulation, not because gasoline was actually in short supply. And, your weeping about regulations “making it more difficult for refiners to invest in new technologies” is completely glossed over.

    You don’t want to upgrade your refineries because it might impact XOM’s profit margin, not because the regulations make it impossible to be a good steward to the people of California.

    As for the power outage in Torrance, SoCal Edison completely disagrees with your take: http://abclocal.go.com/kabc/story?section=news/local/los_angeles&id=8845849

    Thank goodness there is a state like California that isn’t afraid to fight back against XOM and other oil companies.

    • Steve Prelosky says:

      SoCalEd said their power was a ‘flickering light’ condition. That is all it takes to trip a motor and the related control equipment. It is a safety issue when the power goes off – you don’t want motors starting back up out of phase with the supply system – that can generate tremendous torque and can rip a motor shaft apart.
      I used to work at a small chemical plant that had frequent power supply ‘flickers’ – every time it happened, it would take us 6 to 8 hours to restart the plant. The power company couldn’t understand why it was a problem.
      I am sure that in a facility like XOM’s refinery, there would be whole areas of the plant that would have to be started in sequence, have temperatures and pressures brought to the right conditions, and then subsequent processes areas started. Just because you think they are big bad oil company doesn’t mean they can sidestep basic chemistry and engineering principles

    • James Reid says:

      Yes, Tyler and the other 49 (or is it 56?) states have it wrong. Of course, their gasoline prices were not affected by the continuing debacle in California. It’s good for your psyche that California’s problems are always caused by someone else.

      • Magila Gorilla says:

        Don’t forget Hawaii. They have higher gas prices than California, and regulations that are even worse, including minimum prices to prevent large retailers from hurting the business of mom & Pop stores by offering lower prices.

    • Mr Magoo says:

      What a load of bunk Tyler. Typical Progressive Liberal. Everything is always someone else’s fault. Never the poor policy decisions of the Progressive fringe of the Democratic Party. (Can you say Detroit?)

      First of all, in a free market society, its Exxon/Mobil’s right to not upgrade its plants. And why should they? Immediately after they dump millions of dollars into plant upgrades the new environmental “flavor of the month’ policies in California will be put in place and they’ll have to do it again. Second, the Progressive Liberal party of California will NEVER be happy with the oil companies so why should E/M invest in a hostile environment. What the Progressive Liberal party is doing can be equated to going into a restaurant, insulting the chef, owner, bartender and waiter and demanding they serve you differently than the rest of the patrons. Then when you revisit the restaurant you’re wondering why the employees are hesitant to serve you and have a standoff attitude.

      Second, you state that SoCalEd completely disagrees E/M’s take. This is also complete bunk. The SoCalEd representative stated that “How that condition affected the refinery is not known to us at this point in time.” He did not say that SoCalEd is placing the blame for the outage on E/M. But distorting the facts is a typical Progressive Liberal’s tactic, isn’t it Tyler?

      Working for an electrical utility I’ve personally had to deal with power quality problems like what this one sounds like it could be. It is standard utility practice to not accept fault for any problems that occur, otherwise the people that want free money come out of the woodwork and the list of claims goes through the roof. And utilities… read more »

      …know that without data monitoring it will be almost impossible to prove what really happened. Most theories are just speculative.

      I have a Bachelor’s of Science in Electrical Engineering and work for one of the largest electric utilities in my state. I’ve worked for electric utilities for more than a decade so I would be considered an expert in court and I would agree with what Steve Perlosky wrote below. This is a common problem with sensitive equipment and unfortunately, there is no cure. One thing E/M could possibly do is pay for redundant lines to be brought in from different substations and install very expensive switching equipment. But once again, why should they invest millions of dollars in this one refinery only to have the Progressive Liberal party of California outlaw the refinery? Also, I say possible as I have not seen their equipment and don’t know what they have to deal with.

      To sum up, you made your bed, now sleep in it!

      As a side note, I also find it pathetic that Progressive Liberals like you always complain about the greedy, evil oil companies when prices go up, but never happily write how generous oil companies are when prices go down. Typical polarizing Progressive Liberal party of California.

      • martin King says:

        The free market is the problem as it always is. Why should we upgrade which will cost money!! Let’s just pay ourselves more and more and when there is a problem we will make the customers pay!! Corporate scum at their lowest

    • Robert Builder says:

      Mr Harvey, you may not like it, but the laws of Sacramento do not over ride the laws of economics. You recognize that the regulations impose a cost, then complain the company refuses to pay that cost. There actually is a free market solution: If you think that the regulations are conducive to building new refineries, then you go do it. If you are right, you will have an advantage over competitors and make a lot of money. If you are wrong, you will go bankrupt. Don’t complain that others are refusing to do what you refuse to do yourself.

      Be grateful there are still any refineries in California. I lived there for 26 years and started a business. Things got so bad, I laid off 90% of my California staff and moved to Texas, where business (and oil) is treated as the hero, not the villain. Gas today is $2.96. Electricity is 9c/kWhr. There is zero state income tax and a lower sales tax (state+local). Property tax amount on comparable homes is lower (due to lower basis, not rate). Crime is low (safest city in US is Plano). Excellent public education can be found in affordable areas (#1 public high school in US is in Dallas, California public education is ranked #49 among states). An excellent quality of life can be had by middle class (McKinney #2 Best Place to Live). And many Texans carry guns on them, even into the State Capitol Building.

      From your opinion, please, do not move to Texas. We don’t want people like you. Business owners, rich people, and hard working middle class who don’t want to be nannied are welcome.

      • justin jay says:

        Robert half my family is already over there! When I decide to raise a family I’ll be moving my small business to a more pro business state. I used to be a strong liberal in college but opening a business for yourself really opens your eyes to how unfriendly California is to their businesses! When will this state learn government jobs don’t help the economy or help produce exports!!

      • Steve Marin says:

        The comments about Texas being some sort of Shangri-La always make me laugh. I took special note of the “no state income tax” argument that always seems to come up perennially when Texans want to thump their chests about whose state is better. The lack of an income tax is a bit of a farce considering that Texas has some of the highest property taxes in the country for a Southern state. I also thought the commenters a bit too rosy a picture of Texas’ supposed quality of life. Sure, Plano and The Woodlands are nice if you can afford it, but most Texans don’t make six figures, so that’s a moot point. Plenty of crime-infested ghettos in Texas too, not to mention that outside the handful of cities, most of the state is uninhabitable. And Christ on a cracker, who would want to live in some awful little place like Midland? But taxes, crime and quality of life aren’t the scope of this blog – a self-serving opinion piece written by an oil company *ahem* – and the comments which followed sort of just wandered into the weeds.

        It’s true, California has some very stringent policies, and for good reason; our national dependence on fossil fuels have led to some unfortunate consequences such as polluted air and freshwater. You don’t need to be a tree-hugging liberal to want clean air and water, do you? It’s actually quite remarkable that air standards have improved exponentially in Los Angeles and the Bay Area versus 20-30 years ago. Contrast that with Texas, specifically Houston; the air, in my opinion, is toxic. Every time I land at Houston-Bush, the aircraft descends through this greenish soup-like pollution and the smog permeates every corner of the metro area. We will have an even better understanding of… read more »

        …what effects such has we monitor incidences of disease in the years to come in Texas’ oil-friendly towns.

        I won’t dispute that Texas is more business friendly: in fact, the Lone Star state actually writes large corporations checks to relocate their businesses to Texas. And with the petroleum industry subsidizing so much of Texas’ state budget, Austin politicians have the luxury and the money to do just that. But take a look at the trade-off. I would like to see California take some steps to be more competitive but not at the risk of destroying the environment. Again, read: the air you breathe, the water you drink, so on and so forth. I should also mention that recent studies also noted that obesity rates in Texas are amongst the highest in the U.S., as is depression and use of psych medications. Coincidence? Maybe, but regardless of your views on global warming and the like, you must recognize certain uncomfortable links. This shouldn’t even be a Left vs. Right issue; if you have lungs, you should want to breathe clean air. So, as for the whole quality of life comparison, I’ll begrudgingly pay my high taxes and a couple extra cents at the pump and then take that deep breath, because after all, I’m not in Texas, and I certainly don’t swallow opinion pieces written by oil companies.

      • Magila Gorilla says:

        One more amazing fact about Plano is that during the aftermath of Hurricane Katrina Plano (a city of 200,00) welcomed 25,000 displaced New Orleans residents. We provided them top quality housing, our great economy provided them with good jobs, our excellent public education system took in their children with no tax increases, and almost none of them left. Our apartment vacancy rate went from 40% to less than 5% overnight. Our housing market ended up healthier, our economy grew, and we used the principles of private enterprise to integrate this massive influx of destitute people into our community profitably for all involved. This is the true meaning of the American Dream in action, and California would do well to learn from our example.

        • bn bn says:

          An even more amazing fact is that California is the top recipient of refugees of any state. The reason why the Federal government chooses California over most other states to settle refugees is due to its sophisticated social and public services and related infrastructure, as well as the fact that it is the most diverse state in the country. Texas on the other hand, has neither of these things and being that it is a net-recipient of Federal dollars (i.e. Federal dollars make up a sizable majority of the state budget), it was that plus additional Federal handouts that helped pay for Katrina victims and had nothing to do with Texan “goodwill” or the “American Dream”. If anything, Texas is known to be hostile to public spending on social and public services, as well as refugees (which is why you have minutemen on the border shooting at innocent victims crossing from Mexico for a better life, as opposed to Californian civilians which go out and place food and water along the border to help preserve the lives of refugees, because they believe that the preservation of life is more important than the politics surrounding “illegals”).

      • bn bn says:

        If Texas is so great, then why does California still have a higher per-capita income than Texas? And if you look at major cities in California, they trounce Texas in per-capita income. Furthermore, if California was such a “bad place” for business, why does it lead the nation in the number of Fortune 500 companies based there? Why was it the #5 fastest growing economy in the country in 2013, at one point creating more jobs than the next 10 states (including Texas) combined (and it’s worth noting that the the majority of the states that grew faster were all oil-boom states). Why is it that California receives nearly half of the entire world’s VC and that a single city such as San Diego has received more VC funding than the entire state of Texas? Why is it that California is always setting trends for the country (and even further) in almost every sphere and is the top innovation state in the country, and not Texas? Why is it that 15 states plus foreign countries regularly coming to California on their knees with their hands out, begging and hoping to get California’s economic scraps and score some Californian investment and expansions into their states, so that they can help transfer advanced knowledge over, become more innovative and create jobs? Is this not actual proof and admittance (from states such as Texas) that California is superior economically, the economic and innovative engine of the US and thus its economic spill over effect reaches far and wide? I don’t see any states or countries coming to Texas.

        So before you go and parrot the typical GOP/Texan lies and exaggerations and cherry pick facts to best suit your political agenda, let’s remember also that: Texas has the highest/one of the highest teenage pregnancy rate,… read more »

        …high school drop out rates, most regressive and unfair tax system that hurts the middle class and poor, one of the highest inequalities amongst populations, no/low-quality public services, policies of taking public money out of schools to bribe companies to move/expand into the state (the only way it can really attract business/transfer knowledge), the highest number of people with no medical insurance (25% over the entire age group), the 2nd highest per-capita municipal debt in the nation (and growing at a frightening rate), the 5th highest state per-capita debt in the nation, environmental pollution growing at a rapid rate due to lack of regulations (e.g., due to lack of concern from oil companies and the Texan government after citizens in Parker County, TX complained about methane in their water supplies, the Federal EPA had to step in with emergency orders…what kind of state places oil companies first and the health of their environment and citizens last?), vast swathes of Texas are so destitute they are more akin to Somalia…let’s stop bloviating and keep things in perspective.

    • justin jay says:

      I literally laughed my a## off at this comment. Get your head out of clouds! Were refining oil with outdated machines!!

    • Jonathan Lackman says:

      Tyler; if you want to only deal with companies who eschew profit and make no money in the process, you will be dealing with the dregs of business. So SCE disagrees; so what? That doesn’t mean Exxon is wrong, it just means there is a disagreement. You also ignore the other valid points, like the fact that California has to have “special” gas, they can’t just use the same as is floating around the other states. They have “special” cars, with “special” emissions, trying to prove they are “greener” than the rest of the US/World. Well, there are costs associated with all of that, and you can’t say Exxon did it. Thank goodness there is a state like California so the rest of the county can see what happens if these policies are followed and thereby avoid the same fate.