A new report shows that Valero, a Texas oil company, makes tons of money in California.
Back in 2006, California passed Assembly Bill 32, a law that required the state to lower greenhouse gas emissions to 1990 levels by 2020. It's a pretty forward-looking piece of legislation.
But this year there's an initiative on the ballot called Proposition 23 that would basically kill California's climate change law. (Technically, it would just "suspend" A.B. 32 until unemployment drops below 5 percent in the state, but that's not likely to happen for a long time.)
As I noted a little while ago, much of the money for Proposition 23 has come from Valero and Tesoro, two oil companies. That's probably not surprising. But a new report from Oil Watchdog provides an interesting look at why Valero, in particular, is so interested in stopping climate legislation in California.
Valero makes tons of money in California. Its margin on a barrel of oil sold in California is 37 percent higher than its average.
So why are profits so good in California? The answer is that California has limited refining capacity and it's expensive to import gasoline into the state. So the refineries that are here can manipulate the price pretty easily.
Greenhouse gas regulations and a humming clean energy sector would increase Valero's cost of operations and reduce the demand for oil. Valero isn't trying to stop California's climate law because it's evil. The company just loves money more than the natural world.