Need evidence of how California legislation affects Nevada? Look at gasoline.
Nevada ranks among the costliest U.S. states for fuel. As of mid-May, we were behind only California, Hawaii and Washington, at around $4.50 a gallon.
The correlation between Nevada prices and those of our neighbor isn’t accidental. California’s anti-fossil fuel policies hit Nevadans in the pocketbook because we get nearly all our fuel from the Golden State.
Gov. Joe Lombardo went so far as to send California Gov. Gavin Newsom a letter in May expressing concerns about how new California legislation to stop “price gouging” by oil companies could result in more pain for Nevada consumers.
Unfortunately, if California continues its climate-change craziness, we’re going to see costs continue to rise:
- Concern over California’s increasingly oppressive regulatory regimen is driving companies away. ExxonMobil, Chevron and others are tired of politicians who blame high prices on “Big Oil.” Companies have cut infrastructure investment, sold off California operations or shut down facilities outright.
- State officials have stopped issuing new oil and gas drilling permits. In 2020, California issued 2,002 new drilling permits. That fell to 551 two years later and just 25 in 2023. In first quarter 2024 the state issued no permits. Oil brought into California rather than pumped within the state costs more to refine.
- California requires special blends of gasoline, which hurts supply because of the extra work involved.
- California’s mandate to prohibit the sale of internal combustion vehicles by 2035 has brought more uncertainty. Oil companies are less willing to invest in a state careening toward a ban on new gas-powered cars.
Other challenges include California’s cap-and-trade program, which seeks to limit carbon emissions, and its low-carbon fuel standard, which aims to replace fossil fuels with electricity, hydrogen and biofuels.
What does the above have to do with Nevada? The Silver State gets 88 percent of its fuel from California. The remainder comes from Utah, but there are no pipelines from Texas or other oil-rich states to help Nevada wean itself from California’s energy instability.
Over the past few decades California has created an expensive and hostile environment for oil companies, meaning consumers in California – and Nevada – pay well above the national average for gas.
“Any California policy that restricts oil supply in some way affects Nevada,” said Kevin Slagle, vice president with Western States Petroleum Association.
California’s opinion of blue collar businesses such as the oil and gas industry has long been one of antipathy, and this antagonism has grown under Newsom.
“When Gov. Newsom came to office he made it clear that the future of the industry in California was limited in the near term and nonexistent in the long term,” Slagle said.
Newsom has accused petroleum suppliers of price gouging. He went so far as to convince the state legislature last year to impose state oversight on oil company finances and even fine them for excess profits – the legislation Lombardo addressed in his recent letter to Newsom.
Not surprisingly, major oil companies reacted accordingly.
More than two-thirds of refineries in California have closed in recent years – from 33 down to nine – in large part because of the oppressive regulatory environment.
Last year, oil giant ExxonMobil, citing California’s anti-business attitude, announced it was exiting the state by selling a joint venture with Shell to a foreign firm.
Chevron has “slashed investment in California by hundreds of millions of dollars since 2022 and rejected capital projects because the state’s energy policies have ‘made it a difficult place to invest,’” the Financial Times reported.
Still, the Golden State refuses to ease up on its draconian environmentalism.
California, it is understood, has little interest in looking out for consumers. This includes Nevadans, who, while directly impacted by their neighbor’s actions, have no say in their policies.
Kevin Dietrich is Director of mainstream media for Nevada Policy.
