California is a state of contradictions. We lead the Nation in environmental regulation, promote our proud energy goals and defend a rapid transition away from fossil fuels. However, despite this green image, our economy, and daily life, are still executed in oil and gas.
Fossil fuels represent approximately 8% of the economy of $ 3 billion from California, but that is the first 8%. “If you don't get that first 8%,” I tell my students, “don't get the rest of our economy.” Oil feeds everything from trucks to tractors and construction equipment. Without it, you cannot build roads or bridges or bring products to groceries. Without refined oil products, it does not manufacture cement, steel, plastics or even lithium ion batteries in electric vehicles.
Despite these realities, California's energy policy is leading to the dismantling of the critical infrastructure that supports this essential system. Our State has lost more than 30 refineries in recent decades. Now we have only nine main gasoline producers, and two more are scheduled to close in the coming months, Phillips 66 in Los Angeles and Valero in the Bay area. These two plants represent 284,000 daily production barrels and represent almost 18% of the state's total refining capacity.
California is at the top of one of the world's largest reserves, the schist of Monterey. But due to politics and regulation, we import most of our oil, even of Iraq, Saudi Arabia, Brazil, Guyana and Ecuador. California has also imported oil from Russia and Venezuela. Ironically, we have among the cleanest refining standards in the world, but we import fuel of places with lower environmental and labor protections.
All this is enabled by a supply chain that is more vulnerable than the majority is done. We do not have important pipes that bring oil to California. We trust the ships, many of Asia, which take between 30 and 40 days to deliver fuel. These foreign oil tankers contaminate amazing rates. Surprisingly, because pollution occurs on international waters, the California Air Resources Board did not tell. Closing a refinery in California and importing more fuel causes a net increase in pollution. And adding to our dependence on foreign oil is risky when global instability is increasing.
This is not just a self -inflicted energy crisis. It is also a national security problem.
The military bases in California, Nevada and Arizona depend largely on refineries in the state for specialized aviation fuel and other essential oil products for operations. As the refineries go out, the supply chain narrows, increasing the dependence of the imports of Asia and other places. These gaps create logistic and strategic risks unacceptable for US military preparation in Western states.
And remember, it is estimated that there are hundreds of millions of barrels of accessible oil under our feet. However, we have built an energy model that depends on the importation of foreign oil and, now, a growing dependence on gasoline supplied by abroad.
This is not only unsustainable. It is also an irresponsible limit.
California's energy transition is inevitable, but the way we get there is important. We cannot pretend that fossil fuels have already left. We still need them for the economy, for mobility, for national security and for working people who cannot pay a $ 60,000 electric vehicle or a sunroof.
We have the tools, talent and resources to lead a responsible energy transition, one that takes advantage of our production in the state, balances environmental administration with economic pragmatism and protects our most vulnerable communities along the way.
But we have to be honest about where we are. And at this time, fossil fuels still feed the state of gold.
Especially for the next refinery rules and a new tax They enter into force in JulyThe Californians are ready to pay the highest prices of the nation's gasoline. Our prices are inflated by a network of taxes, rates and boutique regulations that have become thicker and faces over time. Even if the oil fell to $ 0 per barrel and the refining were free, the Californians would continue to pay around $ 1.82 per gallon in the pump, $ 1.64 for state taxes and rates, plus 18 cents in federal taxes on gasoline.
According to Caltrans, Californians drive approximately 1,200 miles per month. If you are a working -class Californian and the gas rises 50 cents per gallon, that adds around $ 500 in annual fuel costs. And because he pays that with dollars after taxes, he would need to earn at least $ 750 just to cover it.
That is important for a construction worker who travels 60 miles per day in a truck. It is important for a single mother who cleans the houses throughout the city or a physiotherapist that leads to home calls. Most of these people cannot easily exchange their vehicles for teslas and dodge gasoline walks. Consumer analysis as noted in Calmatters indicates that most EVs are bought by Californians of higher income that live in areas such as Atherton, Palo Alto, Sunnyvale and Mountain View.
The people most affected by the increase in gasoline prices are the least capable of paying alternatives. For most Californians, there is no viable mass transport available. People are simply trapped by spending more and more of their income in vehicles with gasoline on which their lives depend. The policies of our State punish people for not being able to adapt quickly enough to a green future that is not yet built. It is a regressive tax disguised as environmental action.
Until California realistically the gap between the aspirational climatic objectives and the equitable execution of policies, the high environmental vision of the State will continue to rest restlessly on the shoulders of its most vulnerable.
The new special state tax that adds approximately 2 cents a gallon entered into force on July 1, and Carb is pressing for a new low carbon fuel standard that could add and potentially important costs for gas prices and diesel fuel. No one knows exactly how much, not even the Board proposes the rules.
In a recent supervision hearing of the Assembly, Carb officials were asked if they analyzed their regulations for consumer impacts. Your answer: we don't calculate that. The room was silent. It was an impressive admission: regulators that drive politics without executing mathematics.
It is not surprising that we are seeing an exodus of working families. By placing new and unclear costs in addition to an already excessive system, carbohydrates and other regulators are creating what could become a self -inflicted economic shock.
And for what? No environmental progress. California will be forced to obtain more and more fuel abroad, a higher environmental and economic cost. By relying on sources of contamination and intensive carbon shipment, we have simply outsource our emissions to other countries. California is not reducing emissions. We are exporting them.
If this sounds reckless, it is. But more than that, it is unfair.
These policies are not carrying the rich. They are crushing the working class. They are forcing families to choose between gas and groceries, between access to work and housing stability. They are also subcontracting work abroad.
And they are being implemented by unleashed bureaucrats that, by their own admission in testimony to California legislators, have not calculated the impact of the real world.
California people deserve better than this. They deserve honesty, transparency and politics based on economic realism, not ideological fantasy and environmental dogma. If recent and upcoming changes become a turning point, it will not be for any unpredictable global event. It will be because we chose not to look before jumping.
The way forward demands a pause, a recalibration and a return to common sense. Otherwise, this summer could mark not only another price increase, but the day we begin to lose control of our energy future.
Michael A. Mische is an associated professor at the Marshall School of Business of the USC. Former KPMG director, he is the author of eight books on business and strategy.
