By MYRA P. SAEFONG MARKETS/COMMODITIES REPORTER
Just about everyone in California is being forced to conserve water as the state faces its worst drought in over a century, but its water-guzzling refineries don’t have to.
Mandatory water restrictions have yet to extend to California’s refining sector, according to a special report from Platts issued to subscribers Friday.
“The state seems hesitant to force refiners into the processing rate cuts that would surely follow, which would only present a new set of problems,” the report said, noting that the state’s refining sector uses “hundreds of millions of gallons” of water every day.
District officials have asked refiners to try to voluntarily reduce water use by 5%, the report said, citing comments from Jennifer Allen, public affairs director of the Contra Costa Water District.
That water district is home to two refineries: Shell’s RDS.A, -1.81% RDS.B, -1.70% 165,000 barrel-a-day Martinez plant and Tesoro’s TSO, -0.88% 166,000 barrel-a-day Golden Eagle facility. Shell’s Martinez refinery consumed 4.057 billion gallons of water, or 1.11 million gallons a day, in 2014, which is almost 20% of the county’s total consumption, Platts reported.
“The state’s refiners have avoided mandatory limits to date partly because their usage, while not insignificant, is minuscule compared with the agriculture sector and residential use,” Platts said.
Besides, if refineries significantly cut down their water use, that would curtail production and boost prices for the “boutique,” gasoline and diesel fuel California requires, prompting the state to rely more heavily on gasoline and diesel imports, the report said. California has stringent environmental regulations on fuel.
That state does have a good excuse to shield its refining sector from any potential production slowdown.
The average price for a gallon of regular gasoline at the pump cost $2.785 on Friday, but California pays $3.554, according to AAA’s Daily Fuel Gauge Report. That’s the highest price in the nation.
{Editor’s Note: So the oil companies take our water AND we get to pay the highest prices in the country???]
Martinez Environmental Group 