At Chevron’s facility in Pasadena, Texas, around 125,000 barrels of West Texas crude oil are refined daily, heated to 600 degrees and sent into a silvery 20-story tower where fuels rise to different heights.
Lower down there’s diesel, toward the top is gasoline.
“Jet fuel is about two-thirds of the way up,” said facility manager Alun Phillips.
That jet fuel flows through a tube that looks like a small water slide wrapping around the tower. It heads through the plant to be further processed, and then sent on a pipeline that will help planes take off in cities like Atlanta and Philadelphia, as refined fuels are pricier and in short supply due to the global shortage of crude oil.
War in the Middle East has disrupted energy supply chains and laid bare the trade-offs of diverging energy policies in two of the biggest U.S. state economies: Texas and California.
In California, refineries are closing after years of limited investment amid stringent environmental regulations and state decarbonization goals, while oil production has dwindled.
In Texas, oil production is at all-time highs and refining capacity is the strongest in the country.
“The average retail price in Texas right now is $4 a gallon for regular. In California it's $6.15 — quite a bit higher,” said Debnil Chowdhury, an analyst at S&P Global Energy, who filled up his blue Tacoma at a gas station about 25 miles west of the Pasadena refinery.
Fuel costs and refining look different here in Texas, compared to California for a few reasons, Chowdhury said.
For one, California uses its own special gasoline.
“They aren't allowed to use as much butane because of smog requirements,” he said.
The state requires more expensive components and the use of specialized refineries. And California has much higher taxes on gas.
“Now, with the shutdown of two of the major refineries in California,” Chowdhury said, “they're more dependent on imports.”
Those imports come from Asia, which relies heavily on crude from the Strait of Hormuz.
“The distance is greater, so the logistical cost is also more expensive,” he said. “In Texas, the gasoline at this station probably came from 15 to 20 miles east of here at a refinery.”
But not all Californians are paying more to power their vehicles.
“Down the street there’s a Chevron station selling regular unleaded for $6.29 a gallon … but today I’m ‘filling up’ for free, actually,” said University of California, Davis, economist Matthew Zaragoza-Watkins from a California charging station. He charged up his electric vehicle at zero cost because of a deal for lifetime free charging when he bought the vehicle.
Even so, if he had paid the 34 cents a kilowatt-hour to charge from the California charging station, he estimates it would have cost him equivalent to about $2.25 a gallon — much cheaper than gasoline.
California is a leader in EV adoption. But the state’s regulatory policies and decarbonization goals, and other constraints, have contributed to shutdowns and higher fuel costs, now exacerbated by conflict in the Middle East.
“I think California, being on the forefront, is realizing that trying to move in a new direction involves a lot of constraints and trade-offs, which are not always the easiest to navigate,” Zaragoza-Watkins said. “It's not a great time, and I don't think it'll be a better time in the future.”
