An energy reality reminder is that crude oil by itself is useless black tar, unless you build a multi-billion-dollar refinery to break it down to produce various types of transportation fuels, and oil derivatives that are the basis of the products in our materialistic world.
Without refineries to manufacture that useless black tar that we call crude oil into usable transportation fuels and oil derivatives that are the basis of more than 6,000 products in our daily lives, we’re back to the 1800s.
Why are the California “users” of the products and transportation fuels made from crude oil, and the politicians who hate the guts of in-state refineries, want to drive them out of business?
- Since 2023 California Crude Oil Refining Capacity has dropped by 35 percent.
- Crude oil production capacity in California is in terminal decline, resulting in the state importing from foreign countries more than 60 percent of the crude oil demands of in-state refineries.
- Even now, given the amount of transportation fuels that California is importing from foreign countries, the state continues its vulnerability level of being a national security risk to America.
Refineries are the supply chain source of those products and transportation fuels made from crude oil that has allowed the world to sustain 10 times more people today (8.3 billion) than at the start of the Industrial Revolution of approximately 700 to 800 million people in 1750.
There’s something wrong with this picture to rid the world of the suppliers of the products demanded by the economy as the products from refined crude oil, in addition to supporting more than eight billion people on this planet, have helped hospitals, doctors, and medications, to extend life longevity from 40 to 75+ during those few centuries since 1750.
California in-state refining capacity for transportation fuels continue to diminish:
- Two refineries have converted over to manufacturing renewable diesel. In these cases, 350,000 barrels of crude oil processing per day has dropped offline. They no longer produce gasoline or jet fuel of any volume.
- Within the last seven months, California policies have driven two other refineries, Phillips 66 in Wilmington and Valero in Benicia to shut down operations.
The closure of two refineries in California have increased total transportation fuels of gasoline, jet fuel, and diesel needing to be imported from Asian refineries. This has made California vulnerable to many scenarios that could quickly generate supply shocks or shortages for the entire United States. Some of these scenarios include port problems, weather issues, unscheduled refinery downtimes, or a significant global event.
- In the case of the Iran war, that vulnerability has never been so clear.
- Due to the closure of the Strait of Hormuz, crude oil supplies to Asian refineries have dropped dramatically.
- Asian refineries have been forced to cut back their crude oil charge rates. This forced them as of late March to suspend shipments of gasoline, jet fuel, and diesel that they have been supplying California.
California’s policies are forcing the hands of Chevron, PBF, and Marathon, the three remaining oil corporations in California. Together they own six of the remaining seven operational refineries in the state. From February 26 to March 9, these companies did something unprecedented by dispatching three letters to the governor and the state air board. While they have some varied details they are all very specific on two points:
- The air board has brand new cap and invest amendments that they will be voting on at the end of May.
- These amendments, if adopted, will result in huge fee increases for all three corporations. If the state will not sit down and negotiate with these corporations on these newly proposed amendments, then they will all look at shutting down their refineries and leaving the state.
If this happens, then the famine will not be knocking on the door, it will be kicking it in. Cities have three to five days supply of food on hand. Even now, we are at a vulnerability level in which this is possible.
Here are two questions for the California “users” of the products made from processed crude oil:
- Are the “users” blaming refineries for humans living longer and healthier lives because of the medical industry that did not exist a few centuries ago?
- Are the “users” blaming refineries for virtually eliminating weather-related fatalities that requires a combination of advanced prediction techniques, proactive infrastructure planning, and community preparedness?
The world is not dependent on natural fossil fuels, as no one uses “raw” crude oil that is only black tar. But it has become dependent on the products and transportation fuels made from oil, the same products and transportation fuels that wind and solar cannot make!
Today, we’re a materialistic society. Wind turbines and solar panels only generate electricity but cannot make any of the products or transportation fuels that get made from fossil fuels that support:
- Hospitals
- Airports
- Militaries
- Medical equipment
- Telecommunications
- Communications systems
- Space programs
- Appliances
- Electronics
- Sanitation systems
- Heating and ventilating
- Transportation – vehicles, rail, ocean, and air
- Construction – roads and buildings
- Nearly Half the World’s Population Relies on Synthetic Fertilizers Made from Fossil Fuels
Discussing crude oil alone, too often consultants, educators, politicians, and also many industrial leaders cannot explain how the more than 350,000 wind turbines, and an estimated 3.5 to 5 billion individual solar panels in the world will make the following transportation fuels:
- Bunker fuel to support over 112,500 commercial and merchant ships globally.
- Jet fuel to support an estimated 30,000 commercial aircraft in the world.
- Gasoline fuel: Worldwide gasoline consumption hovers around 300 billion gallons annually.
- Diesel fuel: Global diesel usage is approaching 400 billion gallons annually.
Transportation fuel demands continue to grow to support jet fuel for planes, bunker fuel for ships, diesel fuel for trucks, and gasoline fuel for cars.
Energy-dense fuels like coal, oil, and natural gas – demonized as sources of carbon dioxide – remain the backbone of food distribution, especially in the developed world. They fuel irrigation pumps, fertilizer plants, delivery fleets, farm machinery, and refrigeration. Remove these energy inputs, and granaries would shrink. Famine would no longer be a relic of history; it would be knocking at the door.
With California being the fourth largest economy in the world, the two refinery shut downs resulted in an additional loss of nearly 300,000 barrels per day of state crude oil refining capacity. If the six remaining refineries in the state go down, the ports of Los Angeles, Long Beach, and Oakland will go down. Logistics will collapse. The supply chain of the products and transportation fuels made from oil will grind to a halt. Within a few short weeks, cities will be out of food. This will have a cascading effect in Nevada and Arizona. If three of the busiest ports in America are in fact shut down, it is quite possible that food shortages could reach deep into America. California continues to be the supply chain source of the products and transportation fuels demanded by citizens of the state, and others in America that depend on that supply chain.
Ronald Stein is an internationally published columnist and energy consultant, and a policy advisor for The Heartland Institute.
