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If It’s Working…Break It

The People’s Republic of California has a new plan to “improve” the petroleum industry.  In a report published August 1, 2024, California regulators express concern about the “volatile global petroleum markets” and potential gasoline price spikes.  Their solution: State-takeover of refineries.

 

Let’s follow the regulators’ “logic”:

 

1)    The State must adopt policies to reduce dependence on petroleum.  From the report: “The deployment of ZEVs [zero-emission vehicles] and a robust mass transit system are critical for achieving the state’s climate goals, reducing local air pollution, and eventually eliminating dependence on the volatile global petroleum markets.”

2)    But if petroleum use is curtailed some refineries will close.  From the report: “As demand for gasoline shrinks, refineries may close or convert to processing clean transportation fuels.”

3)    Fewer refineries will destroy competition leading to gasoline price spikes.  From the report: “Price spike risk is especially concerning, as demand reduction is expected to be on a relatively smooth trajectory, while supply declines from refinery closures or conversions will result in steep, sudden declines in gasoline production capacity”

4)    To avoid price spikes the State must purchase and run the refineries.  From the report: “The State of California would purchase and own refineries in the State to manage the supply and price of gasoline,” wrote the study’s authors, with the scope of the initiative ranging from “one refinery to all refineries in the state.”

 

So … the State will use its regulatory and subsidy (wealth-shifting) powers to push refineries out of business; but people will still want gasoline; free-market competition keeps gasoline prices down; but instead of encouraging competition the government will buy the refineries…and reduce competition.

 

What California regulators want to implement isn’t working well in Venezuela, where the socialist government took ownership of all petroleum facilities.  Of all the countries in the world, Venezuela has the largest oil reserves (303 billion barrels—which is 17% of world reserves).  Since the socialist government takeover (theft) of petroleum facilities in Venezuela, oil production has collapsed from 3.5 million barrels per day to less than 1 million.  Folks like Kamala, Bernie, and Gavin keep extolling the virtues of the takeover of private property.  But why is it that no one can point to an example of where that Marxist philosophy has worked?

 

In this country our privately owned/fossil-fuel-based energy system has worked reliably and inexpensively decade after decade.  There is always gasoline at filling stations and natural gas at your stove.  But the government mantra is: if it’s working…break it.  Across our nation, government’s heavy hand is advancing regulations and subsidies designed to drive our fossil-fuel producers out of business.  It’s not really a mystery why.  Regulators and politicians know that our society cannot survive without petroleum and other fossil fuels.  Regulators and politicians don’t want to do away with fossil fuels.  They want to control them.

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