Re: Calif.: New Law limits gasoline crack spreads
EDIT: I mean to be clear 5 remaining REFINERS (as in companies) there are 9 material refineries as in locations in the state left)
Although I think California's government is one of the worst in the world for energy policy (well really any policy but to stay on topic) lets assume this gets in and past all court challenges, my guess is that the five remaining California refineries will still be able to keep their crack spreads at something like a national crack spread + some decent % (30 to 50% is my guess as Cali formulas are provably more expensive to manufacture). So the California crack spread simply will never go over this number and that means the volumes will plod along at current rates with only maintenance capex going forward.
since this law will mean no one will ever, under any circumstance, improve or build out new capacity in the state, the states 5 remaining refineries will basically have california in a hostage situation where they will make good money with fixed volumes and no expansions. Imports will cover the rest and that fuel will come in at crazy high markups (as it does now) that will make the domestic producers look reasonable since so few worldwide refineries meet the california magic specifications. It will be extraordinarily hard to fine current refineries for selling gasoline at lower than import prices. But if import gasoline comes in at an effective crack spread of 30 dollars (because transport plus formulation plus actual cost) it will be really hard to fine California's OWN refineries for selling at 30 or less. That's a pretty fine permanent government protected margin.
If the state starts fining them too much they will just close and california can't import enough gasoline if that happens, there's no pipelines and the ports aren't set up to handle that kind of volume, nor would anyone ever invest money in the state to do it. But I think this is just a bunch of stupid hand waving to please the utopians while the world moves around them.