The financial woes of the State of California are no longer a secret, with the escalating cost of living for its residents becoming a pressing concern.
While Governor Gavin Newsom is engrossed in his feud with Donald Trump over tariffs, his own policies are exacerbating the state's fiscal challenges and adding to the burdens of those barely making ends meet.
Newsom recently announced a lawsuit against Trump to halt tariffs, making California the first state to take such a step. He justified his move by stating, "80% of my kids toys come from China and Ive got family living paycheck to paycheck. Trumps got no rationale, no plan." However, as reported by RedState, Newsom's policies are causing more harm than good, especially in relation to the oil industry.
Newsom's relentless assault on Big Oil has led to yet another refinery announcing its closure in the state. Valero, a major oil company, recently informed the California Public Utilities Commission of its decision to cease operations at its Benicia refinery by April 2026. The company also hinted at reevaluating its remaining operations in California.
This move is significant as California currently has only 14 operating refineries, with one of them, Phillips 66's Los Angeles refinery, already set to become idle starting in October 2025.
The closure of Valero's Benicia refinery and Phillips 66's Los Angeles refinery will result in a loss of 17.5 percent of the state's oil production capacity, a blow that will be felt by middle and working-class families. If Valero decides to shut down its other refinery in Wilmington, the state will lose an additional 5.24 percent of its current capacity, equivalent to 369,000 barrels a day.
To put things into perspective, in 1985, California, with a population of 25 million, had 40 operating refineries. Despite losing millions of residents over the years, the state's population has grown to 39.4 million, and it will soon be left with only 12 operating refineries. This clearly indicates a major supply problem.
Mike Vomund, a top executive at Chevron, which produces over 30 percent of the state's oil, expressed uncertainty about the company's future in California. He stated, "What happens down the road, I have no idea, I won't speculate on that . . . We want to stay here; the problem is the policies of California are making it uninvestable." Vomund cited the state's environmental regulations, refinery surplus bill, and a margin cap on the refining business as major obstacles for the oil industry.
The closure of these refineries will not only disrupt the state's oil supply but also result in a significant loss of well-paying jobs. Governor Newsom's response to this crisis has been far from satisfactory. He reacted to Valero's announcement by saying, "I can assure you, beginning last night we had all hands and we're in the process of addressing any anxiety that may be created or any market disruption that may be created by that announcement."
However, Newsom's track record suggests that his efforts to alleviate any anxiety are likely to be fruitless. His inability to negotiate effectively with the oil industry and his preference for punitive measures over incentives have been widely criticized. As a result, many companies are considering leaving the state, just like the voters who decided to move elsewhere due to Newsom's policies.
Newsom's timing has also been questioned. His claim of having started addressing the issue "last night" seems dubious, as it is unlikely that the oil executives were privy to his plans. As the state grapples with these challenges, it remains to be seen how Newsom's policies will shape California's future.
Login