California’s Two Largest Oil Refineries Could Cost the State $1.7 Billion

Op-Ed: We can’t afford to shutter California’s aging oil refineries yet

The news of a pending, long-term closure of some of California’s largest oil refineries could put our state in a financial bind.

In fact, it could put California in a position where we’re on the hook for some of the cheapest gasoline in the country.

This could lead us down a slippery slope of economic and health-related consequences with a potentially catastrophic effect on the state’s already fragile economy.

According to estimates from the California Energy Commission, the closure of these refineries is going to cost California about $1.7 billion.

Let’s go over what this means for Californians and also the future of America’s gasoline supply.

California’s two largest oil refineries

California has two largest oil refineries in the United States – two of the oldest refineries in the nation.

Refinery 1: Chevron in Richmond was established in 1952. The oldest refinery in America, it had the world’s largest capacity for crude oil processing, producing a high of 7 million barrels per day. A refinery like Refinery 1 – the heart of California’s economy – needs to be in tip-top shape.

Refinery 2: the former Kaiser/Exxon refinery in Santa Clara was established in 1957. The fourth largest refinery in America, it had the world’s second largest crude oil processing capacity, with a capacity of 6 million barrels per day.

The California Energy Commission estimates that the two refineries’ future closure will cost the state $1.7 billion in tax revenue. This is not insignificant. California’s total tax revenue in 2014 was over $150 billion.

The two refineries are the last of a once-staple source of employment. With its growth, however, Refinery 2 was already the third largest contributor to California’s economy. The other contributors were agriculture, manufacturing, travel, and public transportation.

Refinery 1 – the refinery closest to the state capital – began its life as a part of the Santa Clara Valley Authority. It didn’t start production until 1955. Once it started, the refinery’s capacity increased as Refinery 2 became operational and filled in the pipeline. Refinery 2 was the first to make an economic contribution to the state. In 1990, Refinery 1 was designated a California Historic Landmark.

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