One of the key recommendations from the California Energy Commission is to increase flexibility in the gasoline market by allowing the voluntary use of conventional US gasoline in place of gasoline that meets California’s more stringent regulations. This move would help protect consumers from price spikes and shortages while also advancing clean air and climate goals in the state. By creating a mitigation fund funded by fuel sellers who take advantage of this flexibility, older, more polluting cars can be upgraded to electric vehicles, further reducing emissions and improving air quality.
While some oil industry groups have tried to blame California’s regulatory environment for the refinery closures, it is clear that these closures were unexpected and present immediate challenges that need to be addressed. Simply reversing California’s air quality and climate regulations would not solve the problem and would put the health and welfare of Californians at risk.
California’s transition away from gasoline as its primary transportation fuel is a complex process that will require careful planning and implementation. By modernizing gasoline regulations, increasing flexibility in the market, and investing in infrastructure to support clean transportation, California can lead the way in addressing climate change and protecting public health.
As the world looks to California for leadership in the transition to clean transportation, it is important that the state take bold and decisive action to address the challenges posed by the unexpected refinery closures. By working together with stakeholders, regulators, and industry partners, California can successfully manage the phaseout of petroleum while creating a more sustainable and equitable future for all of its residents.
The results of this analysis were eye-opening. Allowing the limited use of conventional US gasoline in California during supply shortages could result in substantial cost savings for consumers, while still maintaining air quality benefits similar to the current system. In fact, the analysis showed that the program could save Californians up to $1.2 billion in gasoline costs over a five-year period, while reducing greenhouse gas emissions and criteria air pollutants.
This proposed strategy offers a win-win solution for California. By allowing the use of conventional US gasoline in limited circumstances, the state can maintain air quality benefits, reduce costs for consumers, and promote equity by investing in communities disproportionately impacted by air pollution. This approach aligns with Governor Newsom’s commitment to addressing climate change, promoting environmental justice, and ensuring a reliable and affordable fuel supply for all Californians.
In conclusion, the recommendations provided by the CEC in response to Governor Newsom’s letter highlight the need for California to address the challenges facing its gasoline market. By updating regulations, embracing innovative strategies, and promoting competition in the market, the state can ensure a sustainable and equitable fuel supply for years to come. The coming weeks and months will be crucial as state agencies and the legislature work to implement these recommendations and shape the future of California’s gasoline industry. Fuel sellers in California have a unique opportunity to contribute to a mitigation fund that would replace older, more polluting vehicles with electric vehicles (EVs). By choosing to participate in this program and contribute 25 cents per gallon to the fund, fuel sellers can help address pollution concerns associated with the relaxation of fuel regulations.
Research has shown that if 10 percent of the gasoline in California in 2030 was replaced with average US gasoline, there would be a slight increase in particulate matter (PM2.5) emissions. However, this increase could be offset by replacing 50,000 pre-2004 cars with EVs, resulting in a reduction in PM2.5 emissions. Additionally, volatile organic compounds (VOCs) and nitrogen oxides (NOx) emissions would also be reduced with the replacement of older vehicles.
To put the 25 cent per gallon mitigation fund into perspective, if California consumes over 10 billion gallons of gasoline in 2030, with 1 billion gallons being replaced with US average gasoline, the fund would have $250 million. This amount could support the replacement of approximately 25,000 older cars each year, leading to a decrease in pollution levels.
Replacing the oldest and dirtiest cars with EVs is a win-win situation. Data shows that pollution from older cars is significantly higher than newer vehicles on a per-mile basis. By removing these older vehicles from the road, pollution levels can be reduced effectively. While newer cars still contribute to pollution due to the larger share of total miles traveled, replacing older vehicles remains a crucial step in addressing pollution concerns.
Although more work is needed to develop a comprehensive program, preliminary analysis supports the hypothesis that a flexible gasoline market coupled with a vehicle replacement program could effectively mitigate pollution. Designing an effective program will require detailed analysis and consideration of various factors, such as contribution levels, targeted mitigation strategies, and program focus.
In conclusion, transitioning away from petroleum and introducing flexibility and competition in the gasoline market is essential to maintain affordability and reduce pollution. By implementing programs that support the replacement of older vehicles with EVs, California can work towards a cleaner and healthier future without compromising public health or providing unwarranted support to the oil industry. This win-win solution benefits both the environment and consumers, paving the way for a more sustainable transportation sector. The Division of Petroleum Market Oversight, an independent agency within the California Energy Commission, was established in 2023 with the aim of overseeing, investigating, conducting economic analysis, and making policy recommendations concerning the transportation fuels market. One of the recent issues that has caught the attention of experts is the closure of the Valero Benicia refinery and its potential impact on gasoline prices in California.
In a recent analysis by Stanford economists, the implications of the Valero Benicia refinery closure on gasoline prices have been discussed. The economists have also put forward recommendations on how to prevent further consolidation in the gasoline market. One of the suggestions includes repurposing the physical infrastructure of the Valero Benicia refinery by converting it into a product terminal. This would involve transforming pipelines and storage tanks currently used for crude oil into facilities for gasoline storage and distribution.
Another proposal put forward in the San Francisco Bay Area Refinery Transition Analysis by Christina E. Simeone and Ian Lange for the Contra Costa Refinery Transition Partnership involves the conversion of excess capacity in the crude oil pipeline network in California to transport refined fuels. This would create a direct pipeline connection between the Los Angeles and Bay Area markets, which currently rely on more expensive marine tankers for fuel transportation.
When discussing fuel regulations and emissions, it is important to note that the EPA MOVES model used for studies may overestimate emissions from newer cars, as it is based on data from a decade ago. Updating the models and underlying data sets would lead to a more accurate assessment, which could serve as the basis for future updates to fuel regulations. On the other hand, emissions from older cars may be underestimated, as these vehicles are more likely to have degraded emissions systems that do not function as intended.
Overall, the focus on the transportation fuels market by the Division of Petroleum Market Oversight and the insights provided by experts on the closure of the Valero Benicia refinery highlight the importance of continuous monitoring, analysis, and policy recommendations to ensure a stable and competitive fuel market in California.
