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I'm Daveid Nazar.

California and oil.

This is a complicated relationship, to say the least.

Especially in Los Angeles, where 100 years ago, L.A. was in part built on the oil industry and oil contributed to LA's thriving economy.

And over the decades, as oil drilling expanded throughout the City of Angels and the Golden State, well, so did the development of communities all throughout California.

Things were going good.

However, over the years, some politicians, environmentalists, oil activists, angry neighbors throughout the state well, they began voicing great opposition to oil wells, oil drilling, fracking, basically anything oil related, partly for environmental reasons and partly for safety reasons.

And in California these days, you now have an oil war.

But.

California is divided these days where oil is concerned.

Those in favor of the black gold versus those against, in part, the argument is over California Governor Gavin Newsom's climate change agenda, the demands for cleaner air and water, the electric vehicle craze and what some perceive as the anti oil climate in California, or at least according to some oil industry officials.

There are many Californians who agree with Governor Newsom's agenda.

However, there are many others who disagree.

What is for certain is that the Golden State has the highest gas prices in the nation, with everyone seemingly blaming the other for the energy quandary.

And Governor Newsom is now leading the war as he takes on Big Oil, with oil companies now saying they are fleeing California.

For example, Phillips, 66, has its facilities in the Wilmington and Carson area of California's South Bay.

Phillips 66 employs nearly a thousand people and produces nearly 10% of the state's gasoline.

For over a century, the Wilmington and Carson oil refineries, located about 15 miles from Los Angeles International Airport, produced millions upon millions of barrels of gasoline for millions and millions of Southern California motorists.

Now, the company says it's going to shutter its massive refinery complex later this year.

In September 2024, Governor Newsom signed legislation to restrict oil and gas operations and to restrict idle oil wells throughout the state.

Specifically with regards to oil wells located too close to schools, daycares and homes, for example, Governor Newsom says the new laws give local communities a greater voice, gives residents more authority to protect their neighborhoods from what he says are the toxic pollutants of oil and gas operations.

Last year, the governor visited LA's Inglewood Oil Field, an oil field we've reported on for years, both the good and the bad.

If you live in LA, you're possibly familiar with the Inglewood Oil Field.

If not, this is the 100 year old iconic LA oil field that, in part, is parallel to the old La Cienega Highway off the 405 freeway that borders parts of Culver City and Baldwin Hills of L.A. County.

The Inglewood Oil Field cuts through the city and is the largest urban oil field in the United States.

There are hundreds of active wells, as well as hundreds of inactive wells that sit on a massive swath of L.A. real estate, over a thousand acres with homes and playgrounds located near the field.

While there, Governor Newsom signed three oil restriction bills into law.

And while oil proponents say this is a terrible mistake, and killing California oil production is basically killing the California economy.

The governor says his new legislation helps protect public health, save the environment, and empower local communities to set greater protections for oil and gas activities in their backyards.

Newsom says this is all part of his Greater California plan to keep Big Oil accountable.

For context, here are the three bills.

Assembly Bill 3233 gives cities and counties greater authority to impose restrictions on oil and gas operations, including limiting or prohibiting new oil and gas developments in their jurisdictions in an effort to safeguard vulnerable communities from the health impacts of industrial operations.

AB 3233 also overrides recent court decisions that had blocked ordinances limiting oil drilling.

Assembly Bill 1866 deals with the dangers of the many oil and gas wells throughout the state that sit idle, inactive wells that have not been properly decommissioned, and could present a risk to both the environment and nearby communities.

AB 1866 imposes increased fees on idle wells, and now there are stricter regulations to ensure that oil companies are held responsible for maintaining and safely plugging idle wells, so there are no leaks or contamination, and Assembly Bill 2716 prohibits the operation of low oil production and gas wells located in the previously mentioned Inglewood Oil Field of Los Angeles.

AB 2716 now imposes a $10,000 per month penalty on these wells until they're permanently plugged and abandoned.

The money generated from the penalties is slated for building new parks.

Governor Newsom says together, these new laws continue.

Califor NEA's ongoing efforts to cut pollution and protect communities.

And last year, California sued Big Oil for what the state said was more than 50 years of deception and damage that have cost California taxpayers billions of dollars in health and environmental impacts.

We're once again empowering local communities to go further than the state itself.

As it relates to your own health and safety and buffer zones.

On the issue of idle wells, as the Assembly member was saying, anywhere, and he said roughly 40,000, which is about right, we have on the low end 37,000, the high end, over 40,000 idle wells throughout the state of California, about 5000 of them are now completely orphaned, which means there's no associated liability except on our backs, meaning the taxpayers are now on the hook for those 5000 wells.

We put up $100 million, a year or so ago, of taxpayer money to cap those wells.

We were able to draw down, through the good work of the Biden-Harris administration, an additional 60 million.

So we have $160 million in a bucket to begin to address and plug those orphaned wells.

But it is absolutely right, and I appreciate the some members point.

It is absolutely right to hold the oil companies themselves accountable to addressing the issues around idle wells before they become orphaned, and they have no liability and we have no recourse.

And so that's another essential part of the bill package we're signing here today.

Specifically, what you see behind me, and throughout this area and, the whole folks accountable, on these low production wells and to create a framework of accountability as it relates to assessing fees and fines, that will go back not to the general fund in the state of California, but back to the community for parks and open space and for healing.

As Mayor Biden said, the environment and the community at the same time.

So those are the three bills.

It's been a long journey.

We've been on.

Over the course of many, many years, decades, has been the case for so many of the advocates here today, but tremendous progress is being made.

Hi Governor Alex Michaelson, Fox 11 news.

Good to see you.

As you know, affordability is the biggest issue in California.

We already have the highest gas prices.

We have the highest gas taxes.

There's concerns about the cost of electric vehicles, the infrastructure for charging them.

What do you say to Californians who may be concerned, seeing this, that it's going to make their lives more expensive?

Well, it's just the opposite.

They're ripping you off.

They go has been ripping you up and they lying to you.

They've been given talking points over and over and over again.

They've been flooding the zone, with lobbyists, and with ads misleading you.

They've been gouging me.

They've been taking advantage of you.

And by the way, right now crude oil prices are dropping below $70 a barrel as prices increase.

In California, they are taking advantage of you.

They're lying to you.

And what they do is they manipulate the facts and they try to play both sides as it relates to opportunities like this to highlight their misdeeds, they immediately say, well, because of the legislation side, that's why you're burdened with these higher prices in California.

That is simply untrue.

They're the polluted part of this climate crisis.

They've been lying and deceiving us for decades and decades and decades.

And it's finally, finally time to hold Big Oil accountable.

And joining me now to discuss this issue, minus the governor, is Catherine Reheis-Boyd.

Catherine is the president and CEO of Western States Petroleum Association, or whisper, as it's known.

Catherine has been with the organization for over three decades.

Catherine, thank you so much for being here.

No, thank you, David, for having me.

It's an honor.

It's our honor as well.

Now, listen, we have lots to discuss.

So first tell our audience all about whisper.

What is whisper?

The Western States Petroleum Association I just mentioned.

Who are you?

Who do you represent?

And then we go from then and we get to the issues.

Well, we represent 150,000 people that really power everyone's life every day.

And as I like to say, we provide affordable, reliable energy every day, everywhere to everyone.

And nobody should ever be left behind when it comes to energy.

So we represent the entire gamut of the oil industry.

So everything from getting oil and gas out of the ground to getting it, transporting it to a refinery to make valuable products of gasoline, diesel and jet fuel.

But most importantly, we also cover five states.

It's not just California.

We cover Washington, Oregon, California, Arizona, and Nevada.

And it's just, been such an honor for me to represent all of the men and women who who really power all of these states every single day.

And they are innovators, engineers, communicators, community members, scientists, you name it.

We do everything.

And it's really, really amazing what it takes to provide affordable energy to the consumers that we we provide every day.

And I'm guessing I don't know a ton about your organization, but I'm guessing it involves legislation, policy or trying to find ways to bring oil to the vernacular, every one being a very responsible way.

I guess you could say.

And we very well said, David.

And we engage with all levels of government, from the governor's office to the legislature, to also at the local level, you know, boards of supervisors, city councils, all the way down at the community level.

So we really do try to educate and bring information forward, but also have a very active listening ear to the, you know, the problems that that people are facing and not just telling them what we think they should do, really trying to understand what they need, how they need it, and how we can be helpful as collaborative partners and solutions for all the states that we operate.

It's interesting you say that, Kathy.

I mean, obviously energy is essential to Californians.

California's, humongous state.

Although honestly, every California interview and I interview lots of people every year, I mean, all throughout the state, they say they cannot afford the gas prices here anymore.

I mean, listen, it's insane.

Just take a look.

When you go to a gas station, crazy.

You believe I'm guessing that you the oil industry really plays an integral part of this equation, sort of in supplying and providing the energy, in this case, oil.

So talk about that, because I also know it's sort of a two part question.

There are conflicting reports.

You listen to the former now Biden administration.

They're like oil drilling is we've done the most we've ever done before.

You know, here's some in the oil industry saying there's been actually a decrease in refineries, a decrease in, let's say, the number of permits issued.

But all of this I know plays sort of into the hand of, of of gasoline, oil and energy.

Yeah.

Thank you, David.

And it's a great question.

I mean, it's a lot to unpack there, but you know, when you look at the energy landscape in a place like California, you've got 40 million people who are driving 36 million cars and trucks every single day.

And so you've got to have the refining capacity to meet demand.

And it's all about supply.

As you said, if you don't have supply to meet demand, you're going to have market volatility.

You're going to have impact on price.

So when you unpack that equation, it's really, really important for any lawmaker at any level to understand the energy infrastructure and the investment that is needed to keep the flow of energy moving from where we make it to where it needs to go to meet consumer demand.

So it really is about what does that look like?

And here you have a state of California, and I've been doing this way too long, as you know that in the 1980s there were 40 refineries here.

And I was working actually in the 1980s.

We now have nine refineries in California.

The demand has not gone down very much at all.

So we have a very tight refining sector.

We have the luxury of crude oil in this state.

The unfortunate thing is we have a governor, an administration that won't provide us permits to get it out of the ground so we can get it to refineries to make gasoline, diesel and jet fuel.

So it is it is very unfortunate that we find ourselves in a place like California, the fifth largest economy, with the inability to come together and figure out how to minimize price volatility when we are able to have those answers.

But it takes, David, as you know, discussion and collaboration and that is what's missing from the equation.

This is not that it can't be solved.

It just has to be solved by people who have the political will to to start peeling that onion and putting the right things in place so we can get where we are to where we want to go.

And everybody wants to get to a sustainable energy future that's in everybody's minds.

And our members, all of the oil and gas companies that we represent are in every facet of energy there.

It's not just traditional oil and gas and making it ever cleaner as we do every day, but it is hydrogen.

It's renewable diesel, it's renewable natural gas, it's wind, it's solar, it's electric vehicles.

We are in it all.

And we believe in an all of the above strategy, a diversified energy portfolio.

As you know, you can't put all your eggs in one basket.

We can't just have one energy source to meet the demands of any state, and particularly a state like California.

You know what's sad to and I just basis on my reporting, you know, we have a very centrist program here.

I'm not going to side with the liberal or liberals or the conservatives per se.

I just, you know, I have a common sense approach to everything.

You know, two things can be true, right?

I mean, we can be concerned about climate change and say, yeah, we care about water, water, we care about the air.

No one wants to begin their day and say, I think I'm going to pollute today.

I'm a polluter.

I mean, we're all to some degree an environmentalist.

With that said, we may also need oil, and oil can be good for the state as well.

And it just seems that the powers that be in the state of California don't want to maybe admit that or acknowledge that it's all about, well, climate change and the environment.

And I don't know if that really serves the best purpose for all of us involved.

Kath.

Yeah.

And, you know, I think we looked at some recent polling even, and there's 84% of all Californians believe they're not being heard.

Affordability is the number one issue.

74% of the people in California believe there should you should not be putting environment over the economy.

And I am a firm believer and my members are that as you said, it is a balance of the economy and the environment.

And I don't think any policy is good unless it balances both.

And right now there is very little on the side of affordability and really understanding what needs to happen.

And there's just a lot on the other side of aspirational goals that, as I always say, you know, you know, technical realities get in the way of aspirational dreams if you don't address them and we're not addressing them.

And hope is not a plan.

And it cannot be politics over policy and market conditions.

In fact, both of those yeah, I do agree there.

I will ask you this.

Why is gasoline so expensive in this state here in California?

Yes, we have the massive gas taxes that infuriate folks here.

Infuriate me.

Taxpayers did not vote on this gas tax.

Let's be honest, I actually broke the story.

Kath in 2018 slammed the state capitol for for not allowing voters to even vote on it.

We had no idea what was going on.

What can we do to have cheaper gas in California?

And to be fair, are you part of the solution?

You mean the oil industry or are you part of the problem?

Well, I believe we're part of the solution.

And I think, you know, as I've said, and we've been in the transition of energy, as I commonly say, since horse and buggy transition is in our DNA, it's what we do.

It's what we will always do and how we will solve the future problems is through this industry, through our innovation, through those ideas for bringing to the table every single day.

But when you look at California, the first thing you have to realize is that the blend of California gasoline is the cleanest, burning and most expensive gasoline in the world.

Why?

Because it's the cleanest gasoline in the world.

So California has very high standards on air quality that we have to meet.

So it's expensive to make it.

And then very few people make it.

So whenever there's a shortage or there's a problem and you have to find additional cleaner burning gasoline, you're not going to find it next door, you're going to find it 40 days away that you have to put it on a tanker and get it here.

And so you can have a shortage of supply.

So one cleaner blend of gasoline.

Secondly, we're a crude island.

We are fuel island as many referred to.

We don't have any pipelines that bring either crude oil that you make gasoline, diesel fuel or product gasoline, diesel or jet fuel into the state.

So if we don't produce it here with our own refineries, with our own crude oil, it is going to be more expensive.

And what we're seeing now is, since we can't get crude oil permits from a wonderful place like Kern County in the central Valley, we're having to look other places for crude oil, pay more for it, put it on tankers, have more greenhouse gas emissions into ports of LA, Long Beach and San Francisco that are already congested.

And who who does not benefit is the consumer.

So that's why, you know, those are some of the reasons.

And then the other reason, as you stated, is certainly we pay a lot of taxes, fees and and costs for environmental programs.

Now, I am not saying the environmental programs are not meritorious, but for cap and trade, low carbon fuel standard, which, you know, would be a whole nother show.

David.

But those and then plus you know obviously the gas tax and other things you've mentioned all of those add to the cap cost of gasoline in California.

So the Energy Commission is required to, look at all the data we're reporting, and then they're supposed to report the net profit taxes.

That or the net profits that the oil and gas companies are making.

And over 11 month period, it was $0.01 per gallon when the state was already collecting $1.10 per gallon based on taxes, fees.

And so if we really want to talk about how to solve the problem, you've got to look at what goes into the cost of a gallon of gasoline, and you've got to look at every facet of that and, and put together a comprehensive plan that addresses the problem.

And we simply are not doing that.

I do appreciate you telling me this.

Maybe I'm getting to all for for the news these days.

I'm becoming a conspiracy theorist.

How?

I said to myself, 87 octane.

91 octane 89.

It's all the same stuff.

What's this nonsense about different blend for California then?

You know, you hear in the news one refinery, was offline, right?

Something went wrong with the one refinery, let's say in Texas or Louisiana, for example.

We're all here in California.

All of a sudden, the prices go crazy.

They increase.

I always said, you know what?

This is nonsense.

Something funny is going on here.

Cough I don't know.

Well, you know, oil is like any other.

It's a global commodity, right.

So when you have a very constrained market like we do in California and then you have anything that happens geopolitically or globally, no matter where it is, it will have an impact, especially if it's the same time you have one of your own refineries.

Unfortunately, having an unplanned outage, and then you have turnarounds which are planned outages.

You have to take refineries down for them to operate safely and do maintenance.

And so you put you know, sometimes you put all that together and there can be a, you know, just a convergence of things that cause a tightness in supply relative to the to the octane levels.

As you know, there are three different grades of gasoline.

And then certainly most of that is based on the combust, the combustion characteristics of the engine.

So obviously high performance engines obviously want a higher octane.

And those that don't have to have that don't.

And so there's these there's basically three blends.

But let's be clear.

All three blends of California gasoline are at a higher standard and cost more to make because of the air quality regulations that exist in California.

So that's that's overlaid on regardless of whatever blend that's interesting.

And it's good to know.

I do want to defend California Governor Newsom a bit and get your take.

Yes.

Their office declined to be interviewed for this special episode.

It was disappointing.

This is a vital issue that we're talking about.

However, is it fair to say that, look, there can maybe be some dangerous to the climate, dangerous to the environment with all the oil production safety issues as well?

Yes.

While millions of Californians cast they're livid right, about the gas prices.

But let's be honest, this is a blue state.

It's an environmentally friendly state.

It's an environmentally conscious state.

You know, we're lawmakers, climate scientists, environmentalist.

These liberal, points of view often rule the roost.

But they're saying, to be fair to Newsom, since he's not here, do you does the oil industry do more harm than good?

No, I don't believe we do more harm to good.

And here's why I say that.

You know, every energy source has issues literally.

And people like to focus on the oil and gas and the traditional side of the business.

But even all of the innovations that are coming forward, whether it's wind that takes solar panels that have to be recycled and destroy some habitat, whether it's whether it's, you know, electric vehicles with batteries that have to be disposed of, whether it, you know, you could go on and on and on.

Every energy source has issues that are associated with it.

And what's really important is to continue the innovation and research and development to make them ever cleaner every day, all the time.

And so we are invested in that.

We do not in any way shy away from the importance of reducing greenhouse gases and climate change.

We understand the importance, we understand the urgency, and we are problem solvers in that space, in in that space in spades.

And so whether it's hydrogen, like I said, we are very involved in hydrogen.

We just had two facilities in Northern California that used to produce gasoline, David, that now produce renewable diesel.

There is no fossil fuel and renewable diesel.

But that does put a constraint on gasoline.

But is it, is it a movement towards the transition?

Absolutely.

Are we in sustainable aviation fuel full time.

It's you know, we're all over that.

And we are investing in better battery technology and wind and solar and all the things I've mentioned and biomass to energy, we're in all of it.

So I believe we are part of the solution.

And I believe that the future is really dependent on us having a seat at that table.

And I just don't feel that we do in the state of California, unfortunately.

What is the best win win solution where we all work together?

Kathy.

And maybe you can advance that narrative about more of what you're doing to help the environment that folks don't know, collaboration and transparency and willingness to really sit down and figure out how do we get from where we are to where we want to go, where are those barriers?

How can we take them down, and how can we advance things in a way that balances the economy and the environment, the incredible research and development and technology that is going on by these companies is what we should be celebrating.

And yet we putting all of our attention on anything but that.

So everything from like I was mentioning, carbon capture and sequestration.

We have just a company in California of our members in the central California region who just finally got approval and permitting on the Tet travel, carbon capture and sequestration storage facility in Central Valley.

How wonderful to think that we can take carbon out of the atmosphere and stored underground and help decrease greenhouse gas emissions that impact the climate.

Absolutely wonderful.

The technology of biofuels, of renewable diesel, like I just said, converting two large facilities to a non-fossil biodiesel.

So all a lot of the majority of diesel now in California is becoming biodiesel.

No fossil fuel, no hydrocarbon.

Who is doing that?

Our industry, who is putting more investment into hydrogen as a fuel technology, this industry.

And it just goes on and on and on and on.

Catherine Reheis-Boyd with WSPA I thank you so much for a great interview.

I can't say how much I appreciate you being here.

Thank you David.

Certainly.

And we hope to interview you again.

We're sorry.

Governor Newsom and his office declined this interview.

We also hope to hear from them on a future broadcast.

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I'm David Nazar.