Oil and gas company Valero Energy slammed Democrat-controlled California as a “hostile regulatory environment for refining” after the state’s Energy Commission accused them of price fixing.
On Wednesday, California Energy Commission (CEC) Chair David Hochschild wrote a public letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66, and Valero — demanding answers as to why gasoline prices were soaring. The agency had previously addressed the same companies on September 30 regarding the same matter.
Hochschild stated the sudden price increases for gasoline were “unacceptable” and that they placed “an undue high burden on California families and businesses.”
The chairman wrote:
Over the course of 10 days, oil companies increased gas prices by a record 86 cents per gallon. At the end of August, crude oil prices were roughly $100 per barrel, and the average gas price in California was $5.06. Now, even though the price of oil has decreased to $90 per barrel, today the average gas price at the pump has surged to $6.43.
Hochschild then accused the oil executives of price gouging, citing past examples of smaller fuel price hikes that were deemed “illegal price-fixing” by the California Department of Justice.
“[R]efinery maintenance alone — especially prescheduled maintenance — cannot explain a sudden $1.54 increase in what refineries charge for every gallon of gas Californians buy,” Hochschild wrote. He then declared his agency “will use every tool at its disposal to get answers” on why prices have suddenly increased.
Two days later, Scott N. Folwarkow, Valero’s Vice President of State Government Affairs, responded with a rebuke of the CEC’s accusation of price fixing.
The Valero executive noted that while its refinery does have a planned maintenance operation, it has made arrangements to keep the facility running as close to full rate as possible. He also stated that post-Covid demand has grown and that supply is limited.
Folwarkow then hammered California’s environmental and energy policy, noting its regulations are a significant reason why fuel prices are so high.
For Valero, California is the most expensive operating environment in the country and a very hostile regulatory environment for refining. California policy makers have knowingly adopted policies with the expressed intent of eliminating the refinery sector. California requires refiners to pay very high carbon cap and trade fees and burdened gasoline with cost of the low carbon fuel standards. With the backdrop of these policies, not surprisingly, California has seen refineries completely close or shut down major units. When you shut down refinery operations, you limit the resilience of the supply chain. [Emphasis Added]
Folwarkow also accused the Golden State of being the “most challenging market to serve” in the U.S., citing that its aggressive environmental policy makes it “difficult to increase refining capacity.”
On the same day as Valero’s response to the CEC, California Gov. Gavin Newsom (D) called for a special legislative session in December to address skyrocketing gas prices in the nation’s most populous state. As Breitbart News has reported, Newsom announced last year that he will ban fracking permits in California in 2024 and has intentions to end oil and gas extraction by 2045.
The national average for gas prices has soared under the Biden administration, reaching $3.919 per gallon on Monday, up from $3.269 a year ago, according to American Automobile Association (AAA). In California, the average price at the pump was $6.330.
You can follow Ethan Letkeman on Twitter at @EthanLetkeman.