Well that'll work out well. It has every other time a government has taken over an industry, especially one so crucial as producing refined petroleum products.

"That suggests that higher prices are indeed the result of California’s green agenda rather than corporate behavior." https://t.co/3qXwFziU1U @amspectator @StevenGreenhut

— R Street Institute (@RSI) February 28, 2025

It's not only in the fever dreams of Right-wingers seeing communists behind every bush (hint: it's only every third bush). Apparently, according to the LA Times California's communist-inspired politicians are seriously considering taking over the refining of oil in their state. 

SACAMENTO, [sic] Calif. — Fresh on the heels of Gov. Gavin Newsom’s emergency legislative session that blamed corporate greed and price gouging for the state’s absurdly high gasoline prices, the state is seriously considering a government takeover of the state’s refineries. I kid you not.

If you think gas prices are high under the state’s absurdly regulated market-based system, just imagine what they’ll be under this scenario. California’s leaders don’t want us driving anyway, so then they could just raise prices at will — rather than indirectly through taxes and regulations — and force us into short-range electric vehicles. And California isn’t exactly known for efficiently operating anything. But at least oil refinery workers will get great pensions.

This possibility isn’t from the musings of paranoid conservatives. 

“Russia. China. Venezuela. Iran. More than a dozen countries make gasoline at state-owned refineries. Could California be next on the list?” asked the Los Angeles Times in an article this week. “California policymakers are considering state ownership of one or more oil refineries, one item on a list of options presented by the California Energy Commission to ensure steady gas supplies as oil companies pull back from the refinery business in the state.”

I love that lede in the Los Angeles Times so much that I will quote it again:

Russia. China. Venezuela. Iran. More than a dozen countries make gasoline at state-owned refineries.

Could California be next on the list?

California policymakers are considering state ownership of one or more oil refineries, one item on a list of options presented by the California Energy Commission to ensure steady gas supplies as oil companies pull back from the refinery business in the state.

“The state recognizes that they’re on a pathway to more refinery closures,” said Skip York, chief energy strategist at energy consultant Turner Mason & Co. The risk to consumers and the state’s economy, he said, is gasoline supply disappearing faster than consumer demand, resulting in fuel shortages, higher prices and severe logistical challenges.

Gasoline demand is falling in California, albeit slowly, for two reasons: more efficient gasoline engines, and the increasing number of electric vehicles on the road. Gasoline consumption in California peaked in 2005 and fell 15% through 2023, according to the Union of Concerned Scientists.

Electric vehicles, including plug-in hybrids, now represent about 25% of annual new car sales. By state mandate, new sales of gasoline cars and light trucks will be banned starting in model year 2035.

This piece wasn't an opinion piece, but rather a news story. If a reporter whose job it is to enthusiastically cover the "energy transition" and the growth of electric cars in California is as derisive about the failure of the California policy model, you better believe it is going off the rails. "Russia, China, Venezuela. Iran." You definitely don't want to be added to that list. 

Is it any shock that oil refineries are shifting their production or closing down in California? Of course it isn't. California energy policies are designed to destroy the oil industry, up to and including pursuing a policy to bankrupt them through lawsuits. If the market weren't so huge--12% of the US population--I would recommend that the companies all bail out of the market as the insurance companies are doing. 

It is just too risky a place to do business. Proto-communists run the state. 

Already, two California refineries have ceased producing gasoline to make biodiesel fuel for use in heavy-duty trucks, a cleaner-fuel alternative that enjoys rich state subsidies. More worrisome, the Phillips 66 refinery complex in Wilmington, just outside Los Angeles, plans to close down permanently by year’s end.

That leaves eight major refineries in California capable of producing gasoline. The closure of any one would create serious gasoline supply issues, industry analysts say. But both Chevron and Valero are contemplating permanent refinery closures.

The implications? “Demand will decline gradually,” York said, “but supply will fall out in chunks.” What’s unknown is how many refineries will close, and how soon, and how that will affect supply and demand.

California has EV mandates designed to eliminate internal combustion engines, but there is no way that they can do that in any conceivable timeline. Even when the date hits for banning the new sales of ICE cars, the ones on the roads will still be there and people will find ways to get them. The policy will fail, but the policy risk for companies in the market is enormous. Any company that can should and will insulate itself from the policy risks as quickly as possible. 

God knows what idiocy will come next, such as nationalizing (statizing?) oil company assets. 

As a practical matter California would likely buy the assets instead of seizing them, but state-run businesses are generally disasters, politically driven, and big money-losers. 

Unlike the Spectator writers, I can't predict whether the government would jack up or subsidize down gas prices because the political imperatives of keeping voters happy and the policy desire to reduce fossil fuel use clash mightily. Maybe a sliding scale gas price based on income?

God knows. It's a stupid idea either way. 

California is a basket case for many reasons. The government distorts the market so much, then distorts the market more when it tries to fix the problems it creates. It's full employment guarantees for the politicians and state workers, but misery for everybody else.

It's a shame. California could be nirvana, or close enough. But the state is run by communists.