LA Times: Is California government considering oil refinery takeovers? Yes, it is

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Russia. China. Venezuela. Iran. More than a dozen countries make gasoline at state-owned refineries.

Could California be next on the list?

California policymakers are considering state ownership of one or more oil refineries, one item on a list of options presented by the California Energy Commission to ensure steady gas supplies as oil companies pull back from the refinery business in the state.

“The state recognizes that they’re on a pathway to more refinery closures,” said Skip York, chief energy strategist at energy consultant Turner Mason & Co. The risk to consumers and the state’s economy, he said, is gasoline supply disappearing faster than consumer demand, resulting in fuel shortages, higher prices and severe logistical challenges.

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Electric vehicles, including plug-in hybrids, now represent about 25% of annual new car sales. By state mandate, new sales of gasoline cars and light trucks will be banned starting in model year 2035.

The drop in demand is causing fundamental strategic shifts among the state’s major oil refiners: Chevron, Marathon, Phillips 66, PBF Energy and Valero.

Already, two California refineries have ceased producing gasoline to make biodiesel fuel for use in heavy-duty trucks, a cleaner-fuel alternative that enjoys rich state subsidies. More worrisome, the Phillips 66 refinery complex in Wilmington, just outside Los Angeles, plans to close down permanently by year’s end.

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A state refinery takeover seems like a radical idea, but the fact that it’s being considered demonstrates the seriousness of the supply issue.

It’s one of several options laid out by the California Energy Commission, which is fulfilling a legislative order to find ways to ensure “a reliable supply of affordable and safe transportation fuels in California.”

The options list is disparate: Ship in more gasoline from Asia; regulate refineries on the order of electric utilities; cap profit margins; and many more.

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