Thread by @anasalhajji

Thread on California Gasoline Crisis:

1- I wish I was still teaching at the university. I would have used the recent Valero letter to the #California Energy Commission as the main reference for a two-hour lecture on the impact of public policy on the oil sector. $VLO #Oil #OOTT

2- The commission sent Valero a letter requiring answers to certain questions within ONE business day. Yep, ONE!
Velero responded with a two-page letter within one business day. I am impressed, as you can tell, with the letter. #Oil #Gasoline #Climate

3- The letter highlighted the "countless investigations" every time gasoline prices increased in the state. The investigations "have demonstrated, market drivers of supply and demand, together with government-imposed costs and specifications, determine market price" #OOTT #oil

4- Letter: "Ironically, on the same day we received the Commission's letter, a federal judge in a 103-page reasoned order, following a review of thousands of pages of documents and hours of depositions and discovery, yet again threw out another case alleging price conspiracies"

5- The $VLO letter emphasized that refinery maintenance is required to avoid a major outage & to "keep the refinery running safely and properly and to meet regulatory expectations of the state" It also stressed the idea that it found a replacement to meet contractual agreements

6- I liked the part where they answer the question: Why are inventories low?
- In a tight market during recovery from Covid, inventories draw down!
They indirectly hit back at the commission (my wording here): You do not want high inventories in a tight market. do you? 😂
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7- It is only logical for California inventories to decline when refineries close down. Their working inventories disappear because they do not exist anymore.

(They do not blame the California government directly here, but will say it later)

8- In my view, the Commission asked questions they already know the answer to. For example, why gasoline prices in California are high & completely disconnected from the rest of the nation?
See Valero's amazing and painful response below:

9- "For Velaro, California is the most expensive operating environment in the country and a very hostile environment for refining.
California policymakers have knowingly adopted policies with the expressed intent of eliminating the refinery sector"

more on $VLO response below

10- "California requires refiners to pay very high carbon cap and trade fees and burdened gasoline with the cost of the low carbon fuel standards. With the backdrop of these policies, not surprisingly, California has seen refineries completely close or shut down major units."
👇

11- $VLO continued to hit back "California is the most challenging market to serve in the United States for several additional reasons.
California regulators have mandated a unique blend of gasoline that is not readily available outside of the West Cost."
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12- "California is largely isolated from the fuel markets of the central and eastern United States.
California has imposed some of the most aggressive, and, thus expensive and limiting, environmental regulatory requirements in the world."
#California #Oil #Gasoline #EFT

Finally: " California policies have made it difficult to increase refining capacity and have prevented supply projects to lower operating costs of refineries"
Good Job $VLO
(There was a typo in the original text and I corrected it above)

Sory, typo.. Valero