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Power Transportation

What Happens When a California Oil Refinery Shuts Down? (yahoo.com) 132

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."
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What Happens When a California Oil Refinery Shuts Down?

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  • No way (Score:2, Interesting)

    by saloomy ( 2817221 )
    This has anything to do with the new law Newsom just signed that the refinery cited as the cause. No way.
    • by Nicholas Schumacher ( 21495 ) on Saturday October 19, 2024 @10:54PM (#64878493) Homepage

      The article explicitly said that the refinery claimed the new law was not the cause of the closing...

      • Yes, the oil company was careful not to blame the recent legislation that CA signed into law - and that very well may be true, I assume this is a decision that took a long time to arrive at...

        That said, I've never heard of either a new refinery being built, nor an existing refinery being shut down - why? Because it is all but impossible to get the required permits and approvals to build a new refinery anywhere in America. Oil refiners can expand existing refineries, but old refineries are never shut down.

        Th

    • Re:No way (Score:4, Insightful)

      by GrumpySteen ( 1250194 ) on Sunday October 20, 2024 @04:52AM (#64878853)

      From TFS:

      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,"

      Nothing to do with new laws. Everything to do with maximizing profit.

    • Depending how it's powered, the grid might sigh a little sigh of relief of it was grid powered
  • "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!"

    • They've made a surprising amount of progress already:

      https://blog.ucsusa.org/dave-r... [ucsusa.org]

      • The refinery met 8% of California's needs today, 2024. Do we really think CA will consume 8% less refinery products in 2026, after this refinery shuts down?

        I understand they wanted to sell the refinery for years, and absent a buyer, it makes sense to shutter it, but it would be naive to think the law mandating oil companies store a percentage of their production 'just in case' something happens to CA supply. (If there was a need to replace oil that wasn't delivered to a refinery, it would be nice if the fed

        • Typo:

          but it would be naive to think the law mandating oil companies store a percentage of their production 'just in case' something happens to CA supply had no influence on the decision.

    • Re: (Score:3, Insightful)

      More like quitting meat and dairy before arranging sufficient alternative sources of the required nutrients. We don't need dope... but if you think we can do away with oil & gas today, you're sorely mistaken.
      • Re: (Score:3, Insightful)

        Which is ultimately an argument for never doing anything. We have known for half a century what we're doing (actually, what CO2 emissions could potentially do has been known since the 19th century). But after half a century of not just inaction, but active misinformation campaigns, we have to keep plowing that same row longer because "we're not ready, we need more time to do what should have been done decades ago..."

        Why the pretense of even caring?

        • Re: (Score:2, Insightful)

          It's not an argument for not doing anything; it's an argument for making changes deliberately and in a controlled manner, instead of blindly killing supply without considering demand.
      • "Today's going to be really rough. Just another bump..."

      • Plants, stupid. Eat fucking plants.
        • Plants, stupid. Eat fucking plants.

          If you don't eat a LOT of the RIGHT plants you get sick and probably die.

          Even if you DO eat a LOT of the RIGHT plants, in the right (and rather large) variety, you still get sick unless you eat synthetic B12, some bugs, a whole LOT of shiitake mushrooms, or some particular breeds of seaweed or algae...

        • Plants, stupid. Eat fucking plants.

          My car won't run on unprocessed plants, (even if they're actively reproducing).

  • I like it. (Score:2, Interesting)

    by Petersko ( 564140 )

    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.

    • by sinij ( 911942 )

      Energy remains available, just some ancillary things change.

      This is funny way to say that gasoline prices will substantially go up.

      • Re:I like it. (Score:5, Insightful)

        by OrangeTide ( 124937 ) on Sunday October 20, 2024 @06:53AM (#64878929) Homepage Journal

        That's how economics works and it is shouldn't be surprising. Remove some supply from the market suddenly and the prices go up until you find a new equilibrium point. And often new business pops up to ride the changes in the market.

        • That's how economics works and it is shouldn't be surprising. Remove some supply from the market suddenly and the prices go up until you find a new equilibrium point. And often new business pops up to ride the changes in the market.

          It's that last point which is being prevented. In a freer market, that popping up would involve building a new refinery, expanding capacity at an existing one, or increasing imports of gasoline refined elsewhere. I'd be very surprised if California's government allows any of these. The new equilibrium will be higher prices, less demand, and possibly shortages, all of which Sacramento sees as features, not bugs.

          • I believe starting a new refinery in California is allowed, technically, but there's so much red tape that there are other kinds of business that are more cost effective investments. Despite rather generous federal interest rates, capital is still a limited resource.

      • by dgatwood ( 11270 )

        Energy remains available, just some ancillary things change.

        This is funny way to say that gasoline prices will substantially go up.

        And prices for everything else, because everything gets shipped by truck these days. I'd argue that it's a way to say "You'll still be able to buy gasoline. You just won't be able to afford to buy food anymore."

        At what point are we going to accept that California continuing to mandate different gasoline formulations than the rest of the country is splitting us off from the rest of the market, and that we need to roll back those relatively minor environmental laws to avoid bankrupting residents, at least u

    • The oil industry neither renovates or replaces shit. They run it with a skeleton crew who doesn't understand the safety systems, so they override them, then a refinery has some catastrophic event, they do the bare minimum to appease toothless regulators and the public, then they rinse and repeat.
      • That's just patently false. Some players act as you've described. Most of them don't. If that were the default, you'd hear of catastrophes every day. And you don't.

  • A Just Transition (Score:5, Interesting)

    by Epeeist ( 2682 ) on Sunday October 20, 2024 @02:29AM (#64878731) Homepage

    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 vociferously against this, but the main thrust is to ensure that this time there is a just transition, with new jobs being put in place (replacing the building of oil rigs by on and offshore wind farms is one example), so that we don't get the same, wholesale destruction of communities.

    • 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).

      Thatcher thought the magic hand of the free market would fix that automagically.

    • As solar, wind and geothermal replace fossil energy sources, the energy industry's headcount will drop. The service requirements for a windmill or solar panel are small compared to the manpower required for oil extraction, refining and distribution. Grid-connected batteries and smart grids will also be relatively low maintenance. Overall, however, employment will increase as energy becomes cheaper. Cheap electricity accelerates the rest of the economy, particularly as construction equipment and industri
  • Refineries come and go all the time and they are often a tight margin business (on average over time). If you don't have a high volume low complexity, or that complexity doesn't result in an incredibly high equivalent distillation capacity (amount of product you get out, rather than oil you put in) you don't make money and shutdown.

    Refineries shutdown all the time, there's a very strong downwards push on margins driven by larger more efficient refineries being able to provide fuel to you locally cheaper tha

  • https://www.latimes.com/enviro... [latimes.com]

    " —The shutdown of the Phillips 66 refinery complex in Wilmington and Carson next year will force California to make up for the loss by importing more gasoline by ocean tanker, which is expected to raise prices to motorists at the pump.

    —The closure will leave California with eight gasoline refineries, down from 11 five years ago.

    California for decades produced enough gasoline to supply almost all of its own needs, but the era of self-sufficiency is coming quickly

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