…over 14% of the state’s gasoline. Refinery closures already have the state importing 8% of its gasoline supply, which means the state could soon have to significantly increase its imports of refined products such as gasoline, on top of its existing reliance on the Middle East and South America for the majority of its crude oil…
Just last week, Phillips 66 announced it is closing its massive Los Angeles refinery complex, which alone has 8% of the state’s refining capacity, right after the new legislation was passed…
In 2023, California produced just 124 million barrels of oil, meeting 23.4% of state needs, while importing 15.9% from Alaska and 61% from abroad. California’s foreign oil mostly comes from Iraq and Saudi Arabia in the Middle East and Ecuador and Columbia in Latin America.
Losing a quarter of the state’s refining capacity would necessitate replacement with products refined abroad, which would end up being a lot more expensive than shipping in crude oil to be refined in California, which in turn is more expensive than producing oil in-state and refining it.
Anytime they want to EPA can make this happen across the country. Companies have little incentive to build new refineries. Easier to shut them down one by one. Imports increase and prices rise. And EVs become more attractive.
This is not EPA driven, it’s State of California legislation on air quality, which has been steadily tightened over the years. It started with the horrendous smog haze over LA and to some extent San Francisco.
Well, there is that (CARB allowing fewer tankers in port) but this time it is about regulations requiring refineries to maintain more than two weeks’ worth of inventory, and state authority over when they are allowed to shut down for repairs. In addition, there is a proposal to increase the cost of carbon credits next year.
The governors of both Nevada and Arizona (which are both supplied refined products from California via pipeline) have sent a joint letter to Gov. Newsom warning of spillover effects in their states.
Fewer refined products made in California means more will need to be imported from refineries in Asia. Probably not a good situation for our Pacific fleet which is based in San Diego and Hawaii.
The Corporate Tax Rate in the United States stands at 21 percent. Corporate Tax Rate in the United States averaged 32.08 percent from 1909 until 2024, reaching an all time high of 52.80 percent in 1968 and a record low of 1.00 percent in 1910. source: Internal Revenue Service.
The corporate tax rate leaves not much incentive. The IRA and other acts infused incentive. Higher corporate taxes will create even more of an incentive.
The real GDP growth rate in the United States between 1968 and 1972 was 3.0% per year on average:
signed the bill into law on December 22, 2017.
Not including the skewed stuff of the pandemic slightly over 2% growth
Why would you invest billions in a new plant that you know will be under constant threat from green forces. Might be shut down before it opens.
I’d want it fully depreciated in under 10 years. Margins that allow that are rare in a highly competitive commodity business. How can you compete with fully depreciated competitors who can eat your lunch?
Not where i would put my money.
Stainless steel can last forever. Forty year old plants can be very profitable. Unless new regs require major new investment.
Purely depends on what is being produced. The planning office does generally comprehensive studies of IRR.
The two big reasons are in a combination. The market is here in the US. If tax rates are set to optimal the writing off of expenses makes it worth building here.
You are misunderstanding what will be happening for the next four decades.
Corporate taxes are going up so there are expenses to write off. The higher the taxes the more to write off.
Have you noticed the lower the corporate taxes were over the 1981 to 2020 period the less that was written off? Fewer factories were built in the US.
If you are Exxon and need to build a refinery for the US market what do you do? If corporate taxes in the US are low you have the oil refinery built elsewhere. If US corporate taxes are high you build it here because it comes off your taxes. You’d be paying money on US profits to Uncle Sam anyway. You get that money back.
You have to build it in US waters because the cost of the refinery construction is the same anywhere. You only get your tax money back if you build here. Choice pay all your taxes and the cost of the refinery? Really?
Higher corporate taxes make them say “Made in America”.
Phillips 66 has announced that, instead of idling a refinery outside of Los Angeles, they would be closing it permanently.
Phillips 66’s move highlights the evolving landscape of the refining industry in the state, with long-term implications for fuel availability and pricing across the region.
