California Gov. Gavin Newsom hates the fossil fuel industry, waging a war on the oil companies. A few examples:
California already lacks interstate pipelines, leading to a supply shortage. The loss of refineries further reduced the supply.
Both raised prices.
Instead of keeping oil companies and refineries in California, the state chose an expensive route by bringing gas in from…the Bahamas:
US supplies of gasoline are being shipped out of the country to travel thousands of miles via the Bahamas before finally ending up in California, a state battling shrinking fuelmaking capacity and high pump prices.Shipments on the circuitous route are increasing. California imported more gasoline in November than ever before, with more than 40% coming from the Bahamas.
Why take this route?
That Jones Act, a 106-year-old maritime law:
Under the Jones Act, any goods shipped between US ports must travel on US-built, owned and operated vessels. Those tankers are in short supply and expensive to charter. There are about 55 Jones Act-compliant oil tankers worldwide, compared with more than 7,000 oil tankers globally.“Even if there are such vessels, they would charge more than a foreign-flagged vessel would,” said Martin Davies, director of Tulane University’s Maritime Law Center.
You’d think sidestepping the Jones Act would be cheaper, right?
Well, the gas travels 1,100 to 1,300 nautical miles from refineries along the Gulf Coast to the Bahamas.
Then the tanker travels 4,000 to 4,500 nautical miles from the Bahamas to the West Coast.
It can take up to three weeks for a tanker to arrive in California. You also have to pay to transit the Panama Canal. The tanker has to travel through volatile areas.
It’s a complex situation. The more complex, the more money.
Gas has risen 40 cents in California over the last two weeks, averaging $4.58 a gallon. Yes, that’s more than Hawaii.
The national average is $2.92.
The rise in prices comes after Phillips 66 started winding down its Los Angeles refinery and Valero closed its Benicia refinery.
California only has six operating refineries:
Two others are located in the Bay Area, including Chevron’s Richmond refinery and PBF Energy’s Martinez refinery. The other four are located in Southern California – Marathon’s Los Angeles refinery, Chevron’s El Segundo refinery, PBF Energy’s Torrance refinery and Valero’s Wilmington refinery.
Have fun, California.
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