California may have to fight for fuel, Western States Petroleum Association President says | California Politics 360
Jody Mueller, thank you so much for making time for us today. Absolutely, thanks for having me. So just to get *** sense of the lay of the land here, when people ask you. How much of the war in Iran versus state policies, the refinery closures, how much of each has to do with the gas prices we’re seeing right now? The global disruption that we are seeing is really just exposing our system and showing how fragile it is because of all of the policies that we’ve had over the decades of layered policies on top of each other. And I mean over the last week we’ve heard from Governor Gavin Newsom’s administration. California Energy Commission Vice Chair Sevagunda, uh, told *** panel of lawmakers this week that California essentially has 6 weeks’ worth of supply to meet demand, and then beyond that there are basically *** lot of questions. The state could be exposed to higher gas prices after that if the Strait of Hormuz remains closed. Is that. Does the Western States Petroleum Association agree with that assessment as the state has moved more and more towards outsourcing our supply here in the state while demand is not going down, it puts California in *** precarious position where they are now competing with other states and countries for their fuel. He said that I mean California that you know the fuel could certainly come our way beyond 7 weeks but it would come at *** price. Is that, do you agree with that? I do agree with that. We will see, you know, continued pressure on price um in an upward direction unfortunately for consumers as supply comes down here in the state and. Consumers should be concerned and $1 more, $2 more. What do you think? I don’t have *** crystal ball to speculate on what that price might be, but it’s, it’s really supply and demand, and we are seeing less and less supply available and we are competing in *** global marketplace. It’s *** commodity priced, uh, you know, from the worldwide market, so. California is going to have to be fighting for that. What could state lawmakers, state regulators do in the very short term, near term to help with the situation? First and foremost, we have to protect what we have. I was at that same hearing. I sat on that same panel, and they continued to talk about outsourcing our supply of, you know, fuels and bringing in more and more imports into the state of California and as we do that. That really puts the in-state refineries on an uneven playing field with the importers and in the, in I mean in the long term, is there something that the state really needs to consider? I know there was *** discussion around protecting assets, preventing more refiners from leaving, but like what specifically does WISPA, does, does the oil industry essentially need for that, right? We have to have *** better business environment. In California for the entire business community but for in-state refining in-state reproduction the entire industry, the demand is still high and the state is moving toward artificially lowering the supply that we have and that really creates this imbalance so we have to acknowledge that we need to do. Something about the business environment here and make it more conducive to refiners wanting to stay to producers getting that oil out of the ground in the San Joaquin Valley and having *** system that truly supports the needs of the consumers in California. Are you getting the sense that lawmakers, perhaps the new administration. Do they have regrets? Do you, do you get *** sense of regret, buyer’s remorse with some of the policies they’ve passed in the last few years that have driven some of your members out of the state? No, I see more and more policies being proposed. We saw *** slew of bills this year, some that we’re still having conversations around some we were able to have some honest conversations about the impact they would have, but when we see policies being proposed like that that will be so detrimental to this industry, I don’t think that they’re getting the message. Do you think, um, with this discussion around the potential gas tax holiday. Um, with that, like how would that help or impact, um, the oil industry if that were to happen? Do you see that happening? I don’t know that I see that happening because from what I hear from Democratic lawmakers they don’t support that idea. It, it really wouldn’t impact the industry because the taxes are something that are collected and go to the government, so, um, it could lower prices temporarily, but it’s ***, it’s *** temporary fix. It would have to go back up at some point. Um, I think Professor Borenstein yesterday said he would only support that if there was some built-in mechanism for when it would actually be reinstalled, um, into the, you know, the tax system. Professor Borenstein also said that California could go back and reconsider its special fuel blend. Do you concur with that? Could that help? Just, uh, obviously that’s *** long term conversation, but could that help stave off sort of the vulnerabilities that the state is seeing now? It it’s debatable. I think you know our companies that are in state uh have already made those investments to make that gasoline. They helped formulate it. They really went all in, really embraced it, and so it’s tough because again with the business environment when they’re putting those investments out there and they aren’t able to recoup them because now someone can bring in *** competing fuel that doesn’t have to meet the same specifications whether it’s environmental or labor. That’s *** tough one. OK, so that could be complicated then. OK, um, you know, I, I wonder with the election that’s upcoming we have *** primary in June and *** general that will reshape the entire leadership of our state’s government, do you feel like you’re in *** holding pattern right now? I do feel like everyone’s holding their breath and waiting to see, OK, let’s get through the primary. Who are the top two, and then where do we go from there? But this is an urgent situation that we’re in and again there’s this global volatility, but California’s gas prices were the highest in the nation before anything ever even happened in the Middle East. And so I mean, do you think? Urgent action should happen though before this election. What would be ideal or an ideal timeline that could help consumers, ultimately the people who are paying for the gas? Yes, yes, I think so. Eventually the conflict will end. It has to at some point, but we still have the highest gas prices in the nation, even higher than Hawaii, where they have to import everything into their state. So having those honest conversations about how we help consumers and how we look at the policies really makes sure that. Localities, the cities, the local air districts, the state level, the feds even are coordinated and working together to make sure that policies really make sense and do what they’re supposed to do and don’t hit affordability in the pocketbooks of consumers. The California Air Resources Board is discussing updates to the cap and invest program. The last time we talked, I know WISPA had *** lot of issues, *** lot, I mean *** lot of industry folks had *** lot of issues with the proposed rules. They went back to the drawing board. They put out *** new set of rules. What’s the, what’s the temperature check on that? They’re still moving straight ahead for May 28th for that hearing. We did put in *** number of comments there and while we appreciate that they took *** close look at the short term, so really through 2029, end of 2029, and really looked at how they could ease up on some of the allowances for that. Time period, it doesn’t give the assurances beyond that date, so you know post 2030 is still *** big concern and when. Corporations like our companies are making business decisions 1015, 20 years down the line. 3 years really doesn’t get them to where they need to be to really say yes, we’re going to invest in California and we are going to upgrade these facilities and be here for the long term. So essentially California is *** tough sell if it’s only on like *** 3 year timeline, if there’s no guarantee for 1015, 20 years. Yes, it’s very. Very short term focused at the moment um and we are having discussions and and letting them know that we still have concerns, you know, when you look at the timeline that is needed to make those decisions, it’s just not built into what they’ve put forward for me. I know this week you were also at the confirmation hearing for Seva Gunda, the person Governor Gavin Newsom has essentially tapped to monitor this whole situation. What, what were your comments about, um, Mr. Gunda and, and how has it, has he been helpful or hurtful and. In any of this, I appreciate that he has really tried to understand the situation. He also is, you know, he leads the division that looks at the data that our companies have to put forward, so he actually gets more information than we do as *** trade association. So he sees *** lot of the information on imports versus exports and the in-state refining. So I think he has brought the stakeholders together. He has really done *** good job of trying to. Keep the conversations going unfortunately I do think that we are really at the beginning stages of any type of transition even though we keep hearing the word mid transition thrown around so the state is putting policies forward that are very aggressive, uh, and aren’t really closely looking at the supply and demand balance within the state and, and I believe that that’s really what’s gotten us to *** difficult position. And and to take *** step back just to put *** pin in all of this, I mean how at risk is the state of maybe losing another refiner of maybe losing any of the assets that California has with its fuel supply, right? You know, short term, I think that they’re, you know, they gave *** little, *** little bit in the regulation that came forward and that they will be adopting, I, I assume on May 28th, uh, but then that’s just 3 years, so there is kind of that long term outlook and I think most people when they’re looking at the economic impact they’re looking beyond just *** couple of years they’re really looking at these are big facilities that have *** huge impact. And footprint in California, so you can’t just look at it on *** short term basis. Is there anything else you think we should know? It’s it’s *** tough one and we really are here to try and educate and help everyone understand how delicate our system is and how fragile it is because of these policies and anything we can all do to really get to the right decision to help consumers is gonna be *** good one. Jody, thank you so much for your time. Thank you.
California may have to fight for fuel, Western States Petroleum Association President says | California Politics 360
California gas prices are as high as they are right now because of a combination of the war in Iran and state policies that have inherently made the cost of fuel more expensive, according to the leader of the Western States Petroleum Association. “The global disruption that we are seeing is really just exposing our system and showing how fragile it is because of the policies we’ve had over layered policies on top of each other,” said Jodie Muller, the President and CEO of the group which lobbies on behalf of the oil industry at the California state capitol. The war in Iran comes at a precarious time for the oil industry in California, after two oil refineries shuttered within months of each other following years of state leaders pushing to cut the use of oil and gas in exchange for renewable energy. While the state’s supply dwindles, nearly 90% of registered cars in the state still rely on gasoline. The refinery closures mean California must rely even more on imported fuel. State data show about 60% of the state’s crude oil supply is coming from foreign countries. Nearly a third of it comes from Asian countries such as Iraq and Saudi Arabia, requiring the fuel to go through the Strait of Hormuz in order to reach California. In a hearing earlier this week, state energy officials told lawmakers that California has enough fuel to meet demand for the next six weeks if the Strait of Hormuz remains closed. Beyond that, the state has uncertainty with supply and could be vulnerable to significantly higher gas prices. Muller didn’t say directly if she agreed with the six-week assessment but noted California will be competing with other states and countries for fuel. “We will see continued pressure on price in an upward direction as supply comes down in the state and consumers should be concerned,” Muller said. When asked if that could be a dollar more or two dollars more, Muller said she doesn’t “have a crystal ball” but reiterated California would be fighting for fuel. Muller said moving forward, California leaders need to create a better business environment for the oil industry and prevent the state from outsourcing more of its fuel. She said increasing the state’s reliance on imports will put the state’s last few refiners on unstable ground. When asked if lawmakers and the Newsom administration have expressed any regret for state policies that led to this point, Muller said no. She noted lawmakers continue to propose new regulations on the industry. “When we see policies being proposed that will be detrimental to this industry, i don’ think they’re getting the message,” Muller said. When asked about a possible gas tax holiday, which was suggested in this week’s hearing, Muller noted that could help but would only be a temporary fix. Another longer-term option presented to lawmakers at the hearing earlier this week was to reconsider the state’s special blend of fuel. Muller confirmed this would be complicated. “Our companies in state have already made those investments to make that gasoline,” Muller said. KCRA 3 Political Director Ashley Zavala reports in-depth coverage of top California politics and policy issues. She is also the host of “California Politics 360.” Get informed each Sunday at 8:30 a.m. on KCRA 3.
California gas prices are as high as they are right now because of a combination of the war in Iran and state policies that have inherently made the cost of fuel more expensive, according to the leader of the Western States Petroleum Association.
“The global disruption that we are seeing is really just exposing our system and showing how fragile it is because of the policies we’ve had over layered policies on top of each other,” said Jodie Muller, the President and CEO of the group which lobbies on behalf of the oil industry at the California state capitol.
The war in Iran comes at a precarious time for the oil industry in California, after two oil refineries shuttered within months of each other following years of state leaders pushing to cut the use of oil and gas in exchange for renewable energy. While the state’s supply dwindles, nearly 90% of registered cars in the state still rely on gasoline.
The refinery closures mean California must rely even more on imported fuel. State data show about 60% of the state’s crude oil supply is coming from foreign countries. Nearly a third of it comes from Asian countries such as Iraq and Saudi Arabia, requiring the fuel to go through the Strait of Hormuz in order to reach California.
In a hearing earlier this week, state energy officials told lawmakers that California has enough fuel to meet demand for the next six weeks if the Strait of Hormuz remains closed. Beyond that, the state has uncertainty with supply and could be vulnerable to significantly higher gas prices.
Muller didn’t say directly if she agreed with the six-week assessment but noted California will be competing with other states and countries for fuel.
“We will see continued pressure on price in an upward direction as supply comes down in the state and consumers should be concerned,” Muller said.
When asked if that could be a dollar more or two dollars more, Muller said she doesn’t “have a crystal ball” but reiterated California would be fighting for fuel.
Muller said moving forward, California leaders need to create a better business environment for the oil industry and prevent the state from outsourcing more of its fuel. She said increasing the state’s reliance on imports will put the state’s last few refiners on unstable ground.
When asked if lawmakers and the Newsom administration have expressed any regret for state policies that led to this point, Muller said no. She noted lawmakers continue to propose new regulations on the industry.
“When we see policies being proposed that will be detrimental to this industry, i don’ think they’re getting the message,” Muller said.
When asked about a possible gas tax holiday, which was suggested in this week’s hearing, Muller noted that could help but would only be a temporary fix.
Another longer-term option presented to lawmakers at the hearing earlier this week was to reconsider the state’s special blend of fuel. Muller confirmed this would be complicated.
“Our companies in state have already made those investments to make that gasoline,” Muller said.
KCRA 3 Political Director Ashley Zavala reports in-depth coverage of top California politics and policy issues. She is also the host of “California Politics 360.” Get informed each Sunday at 8:30 a.m. on KCRA 3.