A Self-Imposed Energy Crisis Looms In California
A new paper released by a team of researchers at The University of Southern California (USC) and California University-Berkeley (UCB) warns that the Golden State could soon face energy crisis conditions created by anti-oil and gas state policies and the global supply shock. The paper authored by USC Professor Michael Mische, UCB Prof. James Rector and UCB Graduate Research Assistant Joseph Silvi, finds that the state’s gasoline market is “entering a period of acute supply shortages directly attributable to prior refinery closures, and the long-term systemic decline in in-state crude oil production which have been further exacerbated by the ongoing war in the Middle East.”
Alarmingly, the researchers warn that “dramatic reductions in gasoline and crude imports have yet to hit California’s physical supply. California depends heavily on CARB (California Air Resource Board)-compliant gasoline from Asian refiners which provide nearly all of California’s gasoline imports--roughly 20% of the overall gasoline supply for the state.”
Most Asian refiners have been forced to curtail exports of refined products since March 1 due to the disruption of crude exports through the Strait of Hormuz, leaving the state scrambling to find alternatives from other countries. It’s a real challenge in a world in which the global crude markets are undersupplied by 7 to 10 million barrels per day.
Mische, Rector, and Silivi warn that it takes roughly 25 to 45 days for tankers ships to make the trip across the Pacific Ocean, meaning the real impacts would only begin to be felt by Californians during the latter days of April. “Frankly, we’re running out of fuel as we speak,” Mische told me in a recent interview. “We’re down to about 10-day supply of fuel right now and we’ll be feeling stress of that because of the issues in the Middle East and the length of time it takes to move product to California.”
