Editorial: Oil giant Tesoro OK with a certain kind of California 'green'

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.

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