Is the Exxon Refinery Reopening Tied to Climate Change Legislation?

One of the most significant decisions in the effort to reduce the price of gasoline in California is arguably whether Exxon gets to open its Torrance refinery, which has been closed since a February explosion, without meeting California’s environmental standards. A pivotal hearing that was set for today has been delayed for two weeks until after the legislature adjourns Friday.

Coincidental timing or an effort to divorce loosening environmental standards from the focus onlandmark climate change legislation that is likely to pass before the week's out?

There are those of us who believe that environmental standards should be sacrificed to increase the California gas supply. Then there are others who say Californians pay so much more than the rest of the nation that alleviating pollution control standards in a compromise is a wise way to go. Either way, this decision will have big import for California's gasoline inventories, unlike gasoline prices. Here's how it's going to go down:

Exxon Mobil and the South Coast Air Quality Management District are negotiating whether the company will be able to reopen their Torrance refinery with equipment that does not meet California environmental standards. Both parties requested a second reschedule of the hearing, pushing it back to September 17th.

Exxon is so confident that they have already begun installing the older, dirtier equipment.  The equipment at issue, and the one the oil industry has blamed for the buck more that Californians pay at the pay, is called an ESP. ESP stands for Electrostatic Precipitator, a device that filters and removes fine particles, reducing pollution.

Our research shows the explosion was real, but the ensuing crisis was not. While the shutdown of the refinery lowered inventories, it should not have been enough to raise the price of gas so significantly. We have compiled evidence that since the explosion, refiners have used exports, maintenance schedules, and wholesale market manipulation to artificially raise the price of gasoline, and to further restrict supply.

If it wasn’t this ESP that went down, it would be another at a different refinery. In California, when refineries have problems, profits rise. Many believe that by granting Exxon’s waiver to use a dirty-ESP, the hearing board will set an unhealthy precedent that refiners who fail to complete adequate maintenance will be allowed to then use the dirtier equipment they have lobbied for years to use at the expense of the environment of our state.

The situation shows increased need for SB 350, which would cut petroleum use in half in 15 years. By alleviating demand for gasoline by 50% in California, unexpected shutdowns and supply manipulation by refiners will be mitigated by the excess gasoline that will be in the state.

Whether or not the hearing was purposely postponed, it's clear Exxon will likely get what they want. Whether the decision will be correct will depend on whether gas prices fall, and if Exxon acts to reduce emissions as soon as possible.

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