Saudi Arabia face off with Russia on oil production leaving California in the middle.
SHARE: FacebooktwitterFacebooktwitter

With California being the top consumer of fuel additives, which helps maintain the highest standards for fuel emissions, California, logically, would be expected to be hit hard by the recent oil war between Saudi Arabia and Russia. That’s simply not the case though, and Californian residents should rest easy, knowing the two bickering nations will have no effect on their next trip to get gas.

On Mar. 6, Russia decided to violate an agreement they had with Saudi Arabia, which was signed Dec. 2016. This agreement was aimed to decrease oil production to ensure stability for the world. In retaliation, Saudi Arabia lowered the cost of crude oil. 

CA has 15 oil refineries that import the majority of crude oil from foreign nations. It’s common practice for states outside of CA and NY to switch blends of gasoline between seasons, one blend for the winter and one for the summer; the summer blend being more expensive to manufacture.  

What this means for CA is “very few refineries are willing to produce gasoline for that state,” according to senior correspondent Ellen Wald of Forbes Magazine. So when there is a tit-for-tat spat ignited between Saudi Arabia and Russia, it’s reasonable to expect prices in CA to soar. That’s not what we see though.

Russia’s ramped up production of crude oil is not only a break-away from the agreement signed with Saudi Arabia in Dec. 2016, but an overt blow to the shale oil companies here in the United States. Shale oil companies are more commonly known as ‘fracking’ due to the method of extracting the fossil fuel. The increased production of oil is also due to the slump in demand that Organization of the Petroleum Exporting Countries (OPEC) is now feeling following the market panic due to COVID-19. 

CA unsurprisingly is not feeling the effect of the oil war between Russia and Saudi Arabia for one simple reason amongst many others; the consumers pay for it through high gasoline taxes. CA forgot that the gasoline tax was approved through props that CA voters voted for. The excess of clean air in CA mixed with weather the rest of the country dreams about has an effect on a Californian’s short term memory. 

Between 2018 and 2020, gasoline prices in CA have decreased according to the U.S. Energy Information Administration. Additionally, with the plethora of energy efficient vehicles that CA touts from Toyota Priuses to Teslas, CA shouldn’t expect gas prices to rise. CA is the sixth largest economy in the world, and the real effect is a shift toward electric vehicles and a lower dependence on fossil fuels, which in turn drives the prices of oil barrels down, which is what we see at the pumps. 

CA enjoys the sport of griping about the price of gasoline, but outside of commodity traders who have millions, sometimes billions invested, the vast majority of Californians have no clue what additives go into gasoline. There are very creative marketing strategies like ‘Chevron with Techron’ that are aimed at getting CA drivers to buy fuel from specific companies. These catchy made up names give consumers a sense that they know what additives they are using. 

As the viral pandemic continues to spiral into historic unfounded levels of panic, causing markets to plummet, CA drivers are going to see no pending shortage of fuel to put into their hybrid vehicles. 

To a great extent, the world doesn’t dictate what CA pays in fuel costs, CA determines how the world responds to CA’s demand or lack thereof. That’s the benefit of being the pillar of environmental policy shapers, although CA residents don’t like the costs of saving the world. CA courageously has the foresight to maintain the high standards in fuel emission. 

While Saudi Arabia and Russia flaunt their bravado with the intention of dominating the market with archaic forms of fuel, CA will maintain its demand for fuel additives in order to sustain what many feel to be important: clean air. The gasoline tax in CA is inconvenient to many, but they have the option to take public transportation, which is an alternative no one wants, ergo fuel will keep flowing, prices will continue at prices deemed attractive to Californians, and life will continue.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.