A California Republican State Assemblyman is sounding the alarm after attending a closed door briefing that disclosed that Governor Newsome and the Democrat controlled state government have set the stage for a gasoline crisis that could lead to $10 to $12 a gallon gas prices, as well as gas rationing.
There are 3 catalysts contributing to the likelyhood of a crisis that seems to many to be unstoppable.
The first shoe to drop is the estimated 70 cent a gallon increase in taxes and regulations coming in July. California already has among the highest gas taxes of any state.
The next big problem is that 2 of California’s biggest gasoline refineries are shutting down in a matter of months. Industry executives, and others, have warned Newsome and Califoria that they were shutting down largely due to being over regulated by the state. This is a self inflicted wound that Newsome was warned was coming while there was time to fix the problem.
This is where California’s mismanagement becomes Arizona’s problem. Arizona gets as much as 60% of its gasoline from California, the rest from Texas. It gets worse.
The third catalyst of this potential crisis is a pipeline in California. The network of inter connected pipelines not only distributes products all over the state to refineries and storage, it also distributes imports that come into California ports. Imports that will be desperately needed in a crisis.
The problem, and it is a big one, is not only that it is no longer economical to run the pipeline system, but the physics involved in the design of the system do not allow it to function at lower volumes and that is exactly where they are, in decline. Despite California sitting atop a massive supply of oil, only a handful of drilling permits are even applied for due to onerous state regulations. In simple terms, the pipeline is running low and it won’t continue to function.
Two pipelines run by Kinder Morgan bring gasoline into Arizona. If they cannot deliver the gasoline Arizona will face a serious situation with high prices and rationing likely. The pipelines from Texas can not increase deliveries sufficient to offset the loss from California.
Assemblyman Carl DeMaio is calling on Governor Newsome to convene an emergency session of the state legislature, and to take questions himself. A radio interview with DeMaio is linked below.
A disruption in gasoline supply in either state will lead to major economic consequences for everyone, and it was all foreseeable.
