Chevron President Andy Walz sent a letter Tuesday condemning Gov. Gavin Newsom’s proposal to decrease the state’s gas supply, which will clearly result in even higher gas prices at the pump, saying he seeks to address “some of the inaccurate and flawed arguments made by its proponents.”
California’s own Chevron Oil Company announced in August their corporate relocation to Houston Texas from the Bay Area, where it has been based since 1879, the latest big business to flee the Golden State. And Walz said of the 36 states in which they work, only California has the highest gas prices.
That is the argument the Globe has made for some time now: “If the ‘Big Oil’ companies are so greedy, why are they only greedy in California and not greedy in every state?”
In the Chevron letter (below), Walz said:
Chevron is concerned by the recent Committee and Assembly passages of ABX2-1 and seek to address some of the inaccurate and flawed arguments made by its proponents. As the Senate prepares to vote, it is crucial that it makes a fact-based decision. The political posturing that has characterized these proceedings must stop, including baseless and frankly ridiculous claims that the industry is engaging in price gouging. Let us have a balanced, fact-grounded conversation about the state of California’s fuels marketplace, a marketplace weakened by misguided policy decisions, driven bymisleading rhetoric.
Across the three dozen states in which we work, the California government remains unique in its focus on marketplace interference with negative effects on consumers resulting in the highest U.S. gasoline prices. California has investigated the industry numerous times for price gouging and come up with no evidence or charges. Chevron has been a trusted partner to California consumers for 140 years. We value that trust as we strive to reliably provide ever-cleaner fuel to Californians and our neighbors.
Chevron’s move and now the letter comes as no surprise to anyone watching California Governor Gavin Newsom deflect from his own debacles and radical policies to the oil and gas industry, demonizing producers and refiners as evil polluters and price gougers, even filing a lawsuit last year against five of the largest oil companies, including Chevron.
Except, Newsom is wrong. Newsom claims that the state’s highest-in-the-nation gas taxes and prices are not what led to dramatically spiking gas/oil prices but because of price gouging by the oil industry. In May, Newsom even signed a gas price gouging law into place.
Walz challenges Gov. Newsom’s falsehoods and says:
…the claim that regulation is justified because “price spikes are profit spikes” is misleading.
and
the claim that “refiners did not adequately prepare for [planned maintenance events] by increasing inventories and imports,” while we do not speak for other refiners, we believe this to be uninformed and not how we operate.
The Governor’s proposal, ABX2-1, will give the California Energy Commission more authority to impose new mandates for oil storage requirements on oil refineries in California, even as California is on the verge of an energy crisis with the push for electrification by 2035, as John Kabatek, California State Director, National Federation of Independent Business recently warned. “The regulation requirements in ABX2-1 will artificially create a fuel shortage crisis due to limiting the distribution of fuel.”
As the Globe reported, California Governor Gavin Newsom called for a special legislative session after accusing California’s oil refineries of price gouging – a clear sign that he is economically illiterate.
Chevron appears to agree.
Economic fundamentals force prices up when demand outstrips supply. This signals the need to bring in more expensive finished gasoline or blending components. These statements about price spikes also overlook that supply shortages are an outcome ofCalifornia’s regulatory policy and fail to reflect the energy industry’s cyclical nature.
While we do not purport to speak for the industry, quite apart from the unfounded allegation of price gouging, there are many instances where net refining margins are negative, causing refineries to operate at a loss.
Walz continues, addressing Newsom’s price-spiking allegations:
The suggestion that refiners mishandle inventory prior to shutdowns is likewise an ill-informed generalization. We have contractual obligations to supply our customers and go to great lengths to meet them.
California’s oil and gas industry is perhaps the most regulated industry in the state.
As we reported in March, the California Governor, Legislature and State Air Resources Board are working hand in glove to restrict the availability of oil and gas and increase the cost of gas at the pump so severely, middle class and working class drivers will be making choices between groceries and fuel for the car.
The California Air Resources Board, which has targeted the oil and gas industry for many years, is mandating an additional 50 cents per gallon be added to the price of gas in California. This is all part of the goal to force California’s drivers out of their cars, and/or into electric vehicles. But ultimately, the Democrats’ goal is to ban petroleum-powered internal combustion engines by 2035 and gas-powered vehicles.
Notably, the California Air Resources Board is made up of unelected career political appointees. They are not legislators, nor should they be making law.
It is important to note that all tax increases are required to be voted on by the California Legislature. But the CARB has been bypassing the Legislature for years and passing their own “clean air” and “climate change” taxes – obviously with the implicit approval of the Legislature and governor.
Walz addresses California’s increasing taxes and regulations:
Without investment in the critical energy infrastructure that allows California consumers to live their daily lives, your body willensure these products become more expensive and less reliable. The California gasoline marketplace is constrained, and government manipulation will only increase prices.
According to the California Energy Commission, California’s gas tax breakdown totals $1.77, which gives us the highest prices for a gallon of gas in the nation of $4.68:
Here is Chevron President Andy Walz’s letter to the California Legislature:
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