Impact of California’s Refinery Regulations: A Warning from Arizona and Nevada

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Written By Richard Perdomo

California Governor Gavin Newsom’s new refinery regulations are raising alarms among neighboring states, including Arizona and Nevada, as well as major corporations like Chevron.

The proposed regulations, which require refineries to maintain more than two weeks’ worth of inventory and grant the state control over shutdowns for repairs, come amid declining refining capacity in California.

State Senator Brian Dahle warned that the new rules, combined with the California Air Resources Board CARB regulations limiting port access, could lead to increased gas prices.

He noted that California’s remaining aging refineries are already operating at full capacity, making frequent maintenance necessary yet disruptive.

In a bipartisan letter, Arizona Governor Katie Hobbs and Nevada Governor Joe Lombardo expressed their concerns about potential supply shortages and rising costs due to California’s regulatory burdens.

They cited a California Energy Commission report indicating that the proposal could create artificial shortages and increase prices in their states.

Chevron has also voiced concerns, estimating that building the necessary storage tanks could take ten years and cost $35 million each, ultimately leading to higher consumer prices.

The company warned that mandatory inventory requirements might increase supply shortages and lead to permanent price hikes for gasoline, affecting not just California but also neighboring states.

As California’s fossil fuel production continues to decline, there is a growing reliance on marine imports for refinery capacity, complicating supply chains already strained by poor port performance.

The bill has passed the State Assembly and Senate Committees and is set for a vote in the full Senate later this week.

 

 

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