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Energy Cost Burden Analysis

California Energy Cost Premium vs. National Average

  • – California average: $4.82/gallon (June 2025)⁸
    – U.S. average: $3.42/gallon (June 2025)⁸
    –California premium: $1.40/gallon (41% higher)⁸
    – Annual family impact: $1,750 additional cost for average driving⁸

  • California average: ~30¢/kWh (residential)⁷
    U.S. average: ~15¢/kWh (residential)⁷
    California premium: 100% higher than national average⁷
    Annual family impact: $1,200-$1,800 additional cost⁷

Economic Competitiveness Impact

  • – Industrial electricity: 18.5¢/kWh vs. 11.2¢/kWh national average⁹
    – Commercial gasoline: $5.15/gallon vs. $3.65/gallon national average⁹
    – Transportation fuel burden: 45% higher costs affect all business operations⁹
    – Manufacturing competitiveness: Energy costs 35-50% higher than competing states⁹

FOREIGN DEPENDENCE ECONOMIC COSTS

Import Dependence Economic Drain

  • – Foreign oil purchases: $25 billion annually flows out of California economy¹⁷
    – Economic multiplier loss: $50-75 billion in total economic activity from lost domestic production¹⁷
    – Job opportunity cost: 50,000-75,000 potential energy sector jobs lost to foreign suppliers¹⁷
    – Tax revenue loss: $2-3 billion annually in potential state and local tax revenue¹⁷

  • – Iraq: $17.1 billion (21.3% of imports) – highest geopolitical risk
    – Brazil: $16.4 billion ( 20.4% of imports) – transport-cost intensive
    – Guyana: $12.7 billion (15.8% of imports) – limited infrastructure
    – Ecuador: $10.9 billion (13.6% of imports) – political instability

  • – Single-supplier risk: Iraq supplies could be eliminated overnight by sanctions⁸
    – Transport costs: Foreign oil requires expensive shipping vs. domestic pipeline delivery¹⁸
    – Price manipulation: Foreign suppliers can withhold supply to increase prices¹⁸
    – Currency risk: Oil purchases subject to exchange rate fluctuations¹⁸

Refinery Economics and Job Impacts

Economic Impact of Refinery Closures

  • – Phillips 66 Los Angeles: 1,500 direct jobs, $150 million annual payroll¹³
    – Valero Benicia: 1,200 direct jobs, $120 million annual payroll¹³
    – Supply chain jobs: 8,000-12,000 indirect jobs lost¹³
    – Local tax revenue: $50-75 million annually in property and business taxes¹³

  • – Benicia city budget: Valero closure eliminates 25% of city tax revenue¹³
    – Housing market: Refinery closures reduce property values in surrounding areas¹³
    – Small business: Gas stations, trucking, logistics companies face reduced demand¹³
    – Port activity: Reduced petroleum imports/exports affect maritime employment¹³

Replacement Cost Economics

  • – New import terminals: $2-5 billion investment required for finished gasoline imports¹³
    – Storage facilities: $500 million-$1 billion in additional tank capacity needed¹³
    – Transportation: Higher costs for rail and truck delivery vs. pipeline distribution¹³
    – Consumer cost pass-through: Infrastructure investments increase gasoline prices 10-15¢/gallon¹³

Regulatory Cost Analysis

California Energy Regulation Price Impact

  • $1.47/gallon total regulatory premium²²

    – State excise tax: $0.596/gallon²²
    – Cap & Trade: $0.559/gallon²²
    – LCFS (Low Carbon Fuel Standard): $0.170/gallon (current) + $0.520-$0.840/gallon (proposed increases)²²
    – CA Seasonal Blend: $0.120/gallon²²
    – Local taxes and fees: $0.165/gallon average²²

  • – Renewable mandates: Add 8-12¢/kWh to residential bills⁸
    – Grid infrastructure: 4-6¢/kWh for renewable integration costs⁸
    – Storage requirements: 2-3¢/kWh for battery storage mandates⁸
    – Administrative overhead: 1-2¢/kWh for regulatory compliance⁸

Business Competitiveness Impact

  • – Energy-intensive industries: 25-40% higher production costs than competing states⁴³
    – Food processing: Higher transportation and energy costs reduce margins⁴³
    – Logistics operations: 15-25% higher operating costs affect supply chain competitiveness⁴³
    – Data centers: 50-75% higher electricity costs drive investment to other states⁴³

Economic Opportunity Analysis

Domestic Production Economic Benefits

  • – Kern County federal lands: 15,000-25,000 direct energy jobs potential⁴⁴
    – Average wages: $150,000+ annually vs. $65,000 state average⁴⁴
    – Economic multiplier: Each energy job supports 3-4 additional local jobs⁴⁴
    – Career pathways: Energy jobs provide advancement opportunities for non-college workers⁴⁴

  • – Property taxes: $500 million-$1 billion annually from new energy development⁴⁴
    – Sales taxes: $200-400 million annually from worker spending⁴⁴
    – Income taxes: $300-600 million annually from higher-wage employment⁴⁴
    Royalty payments: $1-2 billion annually to federal and state governments⁴⁴

Energy Independence Economic Benefits

  • – Domestic oil development: Could reduce imports by 30-50%, saving $7.5-12.5 billion annually¹⁷
    – Price stability: Domestic production provides price stability vs. volatile foreign markets¹⁷
    – Supply security: Reduces vulnerability to foreign supply disruptions and price manipulation¹⁷
    – Economic sovereignty: Keeps energy dollars in U.S. economy rather than funding foreign producers¹⁷

Business Relocation and Investment Impacts

Business Migration Due to Energy Costs

  • – Tesla Gigafactory: Moved battery production to Texas, citing energy costs and regulations⁴⁵
    – Food processing: Multiple facilities relocated to Arizona and Nevada for lower energy costs⁴⁵
    – Chemical production: Dow Chemical reduced California operations due to energy costs⁴⁵
    – Steel production: Nucor Steel expanded Texas operations instead of California⁴⁵

  • – Data centers: Amazon, Google, Microsoft expanding in states with lower electricity costs⁴⁶
    – Logistics hubs: FedEx, UPS reducing California operations due to fuel costs⁴⁶
    – Manufacturing: Foreign investment increasingly directed to energy-competitive states⁴⁶
    – Renewable energy: Even clean energy manufacturers choose lower-cost states for production⁴⁶

Energy Development Opportunity Costs

  • – Manufacturing jobs: California lost 15% of manufacturing employment 2010-2020 vs. national average⁴⁷
    – Foreign direct investment: California’s share of U.S. FDI declined from 22% to 16% 2015-2024⁴⁷
    – Energy sector employment: Down 35% while Texas energy employment increased 40%⁴⁷
    – Supply chain jobs: Logistics employment growth 50% below national average⁴⁷

Comparison: California vs. Energy Competitive States

Economics Performance Metrics

  • – Gasoline prices: $1.20/gallon lower than California average⁴⁸
    – Electricity rates: 45% lower than California average⁴⁸
    – Manufacturing jobs: Gained 400,000 manufacturing jobs while California lost 200,000⁴⁸
    – Energy sector wages: Average $175,000 vs. California’s declining energy employment⁴⁸

  • – Business relocations: 150+ California companies relocated to Arizona 2020-2024⁴⁹
    – Energy costs: Total energy burden 30% lower than California⁴⁹
    – Population growth: Gained 400,000 residents largely from California out-migration⁴⁹
    – Economic growth: GDP growth 25% faster than California 2020-2024⁴⁹

Consumer Impact Projections

Family Budget Impact Scenarios

  • – Current energy burden: $8,500-$10,000 annually (gasoline + electricity)⁵⁰
    – 2026 projected burden: $12,000-$15,000 annually with refinery closures⁵⁰
    – National average equivalent: $6,500-$8,000 annually⁵⁰
    – California premium cost: $5,000-$7,000 annually above national average by 2026⁵⁰

  • – Delivery services: 25-40% cost increase by 2026 forcing price increases or job cuts⁵¹
    – Restaurants: Food delivery costs could increase $2-3 per order⁵¹
    – Retail: Transportation costs for goods increase 15-20%⁵¹
    – Services: Mobile service businesses face margin compression from higher fuel costs⁵¹

Economic Policy Recommendations

Immediate Economic Relief (0-2 Years)

1) Federal preemption of costly California fuel standards to reduce gas prices $0.50-$1.20/gallon
2) Interstate commerce protection to allow lower-cost fuel imports from other states
3) Regulatory suspension of automatic tax increases during supply crisis
4) Emergency permitting for critical energy infrastructure to maintain supply security

Long-term Economic Competitiveness (2-10 Years)

1) Domestic energy development on federal lands to create 25,000+ high-wage jobs
2) Property rights protection from arbitrary regulatory takings under SB1137
3) Market-based solutions replacing command-and-control regulations that increase costs
4) Interstate energy integration to access lower-cost energy markets
5) Regulatory cost-benefit analysis requirements before implementing new energy mandates

Data Sources & Methodology

Primary Economic Sources

– U.S. Bureau of Labor Statistics – Employment and wage data
– U.S. Energy Information Administration – Energy cost and consumption data
– California Energy Commission – State energy market analysis
– University of Southern California – Economic impact studies
– California Employment Development Department – Job impact analysis

Methodology Notes

– All cost projections based on peer-reviewed economic analysis
– Business impact data reflects actual company statements and relocations
– Family budget impacts calculated using median household consumption patterns
– Competitive analysis compares California to economically similar states