What Happens When a California Oil Refinery Shuts Down? (yahoo.com) 30
A California oil refinery that produces 8% of the state's gasoline is shutting down late next year — a decision the Los Angeles Times says is "driven by climate change, the transition to electric vehicles and demands for cleaner air."
"There's no question we are going to lose refineries over time, because demand is going to go down as we transition to electric vehicles, but I did not expect to see any of them exiting this quickly," said Severin Borenstein, faculty director of the Energy Institute at UC Berkeley's Haas School of Business. California "over the medium term" will have to rely more on imports, he said. "I think part of the response the state's going to need to consider is how to make sure that we can import sufficient gasoline to meet our needs...."
David Hackett, chairman of Stillwater Associates, an Irvine oil consultancy, said he was contacted by Phillips just before the announcement, and was told the closure was a business decision. He said that although the timing was somewhat surprising, the closure wasn't, given the age of the refineries, their relatively small size and the inefficient layout that connects them by a pipeline. "That plant has been for sale for years. It hasn't found any buyers and I think that this has been an economic decision on their part. They looked at the profitability of the place and compared it with the other businesses that they have, and it didn't make the cut," he said.
"The closure is likely to increase California's already high prices at the gas pump, given that much of the replacement gasoline will be shipped in by ocean vessel, analysts say..." according to another article from the Los Angeles Times.
"Environmentalists and community activists cheered the news, however, saying it will mean cleaner air for the thousands who live in the area and that the state must continue the transition away from its dependence on fossil fuels."
"There's no question we are going to lose refineries over time, because demand is going to go down as we transition to electric vehicles, but I did not expect to see any of them exiting this quickly," said Severin Borenstein, faculty director of the Energy Institute at UC Berkeley's Haas School of Business. California "over the medium term" will have to rely more on imports, he said. "I think part of the response the state's going to need to consider is how to make sure that we can import sufficient gasoline to meet our needs...."
David Hackett, chairman of Stillwater Associates, an Irvine oil consultancy, said he was contacted by Phillips just before the announcement, and was told the closure was a business decision. He said that although the timing was somewhat surprising, the closure wasn't, given the age of the refineries, their relatively small size and the inefficient layout that connects them by a pipeline. "That plant has been for sale for years. It hasn't found any buyers and I think that this has been an economic decision on their part. They looked at the profitability of the place and compared it with the other businesses that they have, and it didn't make the cut," he said.
"The closure is likely to increase California's already high prices at the gas pump, given that much of the replacement gasoline will be shipped in by ocean vessel, analysts say..." according to another article from the Los Angeles Times.
"Environmentalists and community activists cheered the news, however, saying it will mean cleaner air for the thousands who live in the area and that the state must continue the transition away from its dependence on fossil fuels."
No way (Score:2)
The refinery explicitly said that was not. (Score:4, Funny)
The article explicitly said that the refinery claimed the new law was not the cause of the closing...
I'm Going To Quit Dope (Score:2)
"There's no question we are going to lose refineries over time... but I did not expect to see any of them exiting this quickly"
I hear - "I'm going to quit dope, but - tomorrow!"
Re: (Score:2)
https://blog.ucsusa.org/dave-r... [ucsusa.org]
I like it. (Score:5, Interesting)
Everybody gets a little nudge in the right direction. The industry shutters a facility completely instead of renovating or replacing it. Consumers and downstream commercial customers get a little shock to make them understand that the transition cannot be perfectly smooth and free. Energy remains available, just some ancillary things change.
We all need to acclimatize to the coming adjustments.
Surplus in the first place. (Score:1)
Re: Surplus in the first place. (Score:3)
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A point of order: environmentalists are cheering this because the emissions in Wilmington are miserable (between the refineries and LA/Long Beach Harbors). It is a small cut but something that will help local communities deal with the miserable air.
As for more practical advice for Califorinians... get an EV or move out; staying won't be worth it without your own PV and EV.
Re: (Score:2)
Plus more fuel burned to transport the imported gas...
Re:Surplus in the first place. (Score:4, Informative)
The problem here isn't the oil business's sales, the problem here is the amount of oil extraction sites. There's been excavations, drilling, fracking, over every sighting, sample, or just guesswork made by looking at a map. Since the oil industry can't put blame on the electric vehicle industry for the ones that were previously closed down, Oil is trying to put blame on the Electric for the normal shutdown of a "wild guesses" extraction site. Closing this platform is a money-saving decision made because it wasn't pumping out enough oil- if any. Which means Oil is raising gasoline prices because they're removing a unprofitable excavation and want to... raise prices so that they can blame Electric vehicles over this.
Completely wrong, given that an oil refinery has nothing to do with "wild guesses", "extraction sites", "drilling", and it isn't "a platform". It's the place they take crude oil and turn it into things like gasoline that you actually use, and are paid to do it. It's a service business, not commodity extraction business. That's why the person cited in the article didn't expect it to happen so soon, because demand hasn't fallen enough to cause the refining side of the industry to become unprofitable.
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Undoubtedly there will be cleanup costs and liabilities associated with repurposing a former industrial site. They're getting out while the getting is good. The last refinery to exit will likely be the subject of hordes of lawsuits as people realize that they can no longer squeeze blood out of a stone while crying "shame! shame! shame!"
Think about it... if the market is going away, fossil fuel ecosystem companies are going to stop investing in facilities like this one. Then they'll stop maintaining them.
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What is going to be a really strange situation is if the US is ever invaded via the west coast. Both the invaders and the US will have to haul their own fuel if any of the fighting happens in California
The invading AI drones and robots will all be electrically powered. They'll find plenty of charging stations in CA.
If it's closing because of demand (Score:1)
But there is a demand for free clicks and scary article headlines and an endless supply of people who get easily spooked.
Re:If it's closing because of demand (Score:5, Insightful)
It will not make the air cleaner because instead of refining in California, refined gasoline must be pumped or trucked into the state, thus actually increasing greenhouse gases.
Stupid environmentalists think that if we just make gasoline impossibly expensive this will all get better. In there mentally damaged way of thinking, people really only drive to work, to school, to get groceries, simply to be annoying. The reality is that driving is a necessity. Every public transportation system in this country, other than New York and Chicago, is profoundly dysfunctional and hemorrhages taxpayer money.
Until this attitude, and the attitude towards nuclear changes, they're not going to accomplish anything, and are best simply ignored. It is actually not possible to build and install solar panels and wind turbines fast enough to meet growing demand let alone offset fossil fuels. The only possible solution is nuclear.
I live in Indiana, and own a Volvo PHEV. This means my car is powered by gasoline and COAL.
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It's not closing due to demand but due to artificially high operating costs in California created by the environmentalists.
You just made that up. Did you read the article?
25% of cars sold in California last year [ca.gov] were zero emission. That number is increasing quickly. By 2035, 100% will be required to be zero emission. It doesn't take a genius to look at those numbers and see what the effect will be on demand for gas. Phillips looked at the numbers and reached the obvious conclusion, that it wasn't worth investing to renovate a plant when there would be no demand for its product in just a few years.
Re: (Score:2)
25% of cars sold in California last year [ca.gov] were zero emission.
This is the second sentence of the page you linked:
One in four new cars sold in California are zero-emission (battery electric, plug-in hybrid or fuel cell electric)
One of those things is not like the others.
Re: (Score:2)
You misunderstand. The fuel it is producing is not excess capacity today. But the predicted future demand curve means it doesn't make sense to renovate or rebuild it. It's an inefficient, dated plant, and closing it makes sense for the owners.
So yes, shuttering this facility changes supply. Demand remains constant and will be filled by more expensively sourced alternatives.
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I can see it closing to maintain prices as opposed to letting them fall. If it does raise prices, they'll blame it on the "transition period" and the government, not shareholders caring less about customers than they used to.
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Gas prices in California absolutely suck (seriously, look on GasBuddy sometime). If demand for gas was already low in Cali, they wouldn't have some of the highest prices in the lower 48. Let's pretend instead of oil refineries we're talking about wireless service providers. What happened to postpaid cellular plan costs after T-Mobile gobbled up Sprint?
Yeah, fossil fuels are nasty and bad for the environment, but their production is still subject to the same economic principles as any other commodity. Ga
Re: (Score:2)
Prices going up because supply is reduced by the exit of a producer is exactly how supply and demand works.
Re: I can't wait! (Score:2)
Socialism for oil companies, not so much for us (Score:2)
US oil subsidies that artificially depress the price of gasoline amount to billions of dollars per year. Maybe if Americans had to pay something closer to the actual price of gasoline, the Invisible Hand of the Market would finally, after decades, start to work.
Added bonus: if the US cured its addiction to fossil fuels, we could finally just buy popcorn, put a fence around the Middle East and watch all the terrorist Arabs and terrorist Israelis slaughter each other. That's a huge win for all of us.
A Just Transition (Score:2)
In the UK, coal was a dying industry in the 1980s. It was effectively killed off by the Prime Minister of the time, Margaret Thatcher. What she didn't do was facilitate any replacement for the coal mines, as a result of which whole communities were, at best, plunged into severe decline or completely destroyed (I lived in Yorkshire at the time, when whole mining villages become ghost towns).
I now live in Scotland, where the oil and gas industry is also in its twilight years. There are those who are vociferou
NIMBYism (Score:2)