The folks at Tesoro Corp. decided to stick around a little longer, after all.
The Texas-based oil refiner doubled down on its California investment last week by buying a BP refinery in Carson near Los Angeles and 800 gas stations for $2.5 billion. The company bought the BP property for the most basic of business reasons: It got a good deal.
Not two years ago, Tesoro was one of the Texas companies that poured $10.4 million into Proposition 23, the ill-considered initiative that sought to roll back AB 32, the landmark law that requires California to fight climate change by reducing greenhouse gas emissions.
"We believe that without the passage of Proposition 23, California's economy and its citizens will suffer 1.1 million lost jobs (and) $3.7 billion a year in higher fuel costs," Tesoro said at the time.
California's recovery has been painfully slow and gasoline prices are high. But AB 32 is hardly at the root of the problem.
Upon making the purchase, Tesoro Chief Executive Officer Greg Goff issued a statement saying the company understands "the complexities and challenges of operating in California."
The statement also said Tesoro is "positioned to generate significant operational efficiencies, increase our ability to satisfy market demand and reduce stationary source air emissions."
The purchase raises red flags. Bloomberg reported that with the purchase, Tesoro will control 23 percent of California's refining capacity.
Through its Arco brand, BP marketed its gasoline by underselling competitors. It's not clear that Tesoro will continue that policy. Tesoro also has shown that it's willing to play rough politics. With its increased stake in the market, the company might decide to throw its weight around.
California has environmental rules that don't exist in other states. AB 32, the new cap and trade program, and low carbon fuel standards will impact the oil business, and pump prices. But Tesoro's decision to expand its footprint here makes clear what we already knew, California's money is the same color as Texas', and there's more of it here.
© Copyright The Sacramento Bee. All rights reserved.
What You Should Know About Comments on Sacbee.com
Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)
Here are some rules of the road:
Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "Report Abuse" link to notify the moderators. Responding to the comment will only encourage bad behavior.
Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.
Do not attack other users; focus your comments on issues, not individuals.
Stay on topic. Only post comments relevant to the article at hand.
Do not copy and paste outside material into the comment box.
Don't repeat the same comment over and over. We heard you the first time.
Do not use the commenting system for advertising. That's spam and it isn't allowed.
Don't use all capital letters. That's akin to yelling and not appreciated by the audience.
Don't flag other users' comments just because you don't agree with their point of view. Please only flag comments that violate these guidelines.
You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "Report Abuse" link to submit those comments for moderator review. You also may notify us via email at email@example.com. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.
If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them.