Last month, the Valero energy company announced plans to shut down at least one of its two California refineries in 2026. That caught the attention of Michael Mische, associate professor of management and organization at the University of Southern California.
“California can ill afford the loss of one refinery, let alone two,” Mische warned.
Multiple models indicate that the shutdown of the two California-based refineries could possibly place the Golden State in a precarious economic situation and create a gasoline deficit potentially ranging from 6.6 million to 13.1 million gallons a day, as defined by the shortfall between consumption and production. Reductions in fuel supplies of this magnitude will resonate throughout multiple supply chains affecting production, costs, and prices across many industries such as air travel, food delivery, agricultural production, manufacturing, electrical power generation, distribution, groceries, and healthcare.
According to Mische, on the USC faculty since 1997, there’s more to it.
“The estimated average consumer price of regular gasoline could potentially increase by as much as 75 percent from the April 23, 2025, price of $4.816 to $7.348 to $8.435 a gallon by calendar year end 2026. We can expect retail prices to be even higher in counties such as Mono and Humboldt.” That caught the attention of California Gov. Gavin Newsom.
“Apparently, all it takes to make headlines these days is publishing an unsourced ‘study’ by someone bankrolled by Saudi Arabia utilizing the scientific method of ‘guessing,’” Newsom’s press office posted on X. “Would encourage reporters to check sources before lending your outlet’s credibility.” (RELATED: Research Debunks Newsom’s Price-Gouging Shtick)
Newsom failed to address the refinery shutdown in any detail and presented no plan to boost the state’s refining capacity. And as embattled Californians might note, the governor offered no independent analysis to challenge the projected gasoline price increases. The “bankrolled by Saudi Arabia” charge is not an argument, but it caught the USC professor’s attention.
“Allegations have been leveled as to being an ‘agent’ of, working for or on behalf of, and being ‘bankrolled’ by Saudi Arabia,” the USC professor told reporters. “Nothing could be further from the truth, and the allegations are patently inaccurate and without substance and merit. For the record, my work in Saudi Arabia had absolutely nothing to do with petroleum, and I received no payments from any Saudi petroleum company or any oil company.” (RELATED: Newsom’s Battle Against Misinformation Should Be Directed Inward)
As Professor Mische and Californians should know, the Saudi smear follows revelations of Newsom’s advocacy for the People’s Republic of China.
“ChinaSF has been operating as de facto satellite of the mayor’s office in Shanghai since at least 2011,” the authors contend. “In effect, this private funding mechanism prioritized streamlined services for Chinese companies while shielding them from the oversight and accountability that local companies faced while taking part in a government program.”
According to Fool’s Gold, by late 2018, “ChinaSF had expanded and evolved into an actual 501(c) 3 nonprofit called GlobalSF, registered a few weeks after Newsom was elected governor.” ChinaSF became “an official partner of California’s newly formed China Trade and Investment Network, which operates directly out of Gov. Newsom’s Office of Business and Economic Development, also known as GO-Biz.”
In April 2020, Newman signed a “$990 million no-bid deal” for masks with the Chinese company Build Your Dreams and “refused to release details to the legislature.” On Newsom’s watch, San Francisco became something of an outdoor latrine, but in 2023, he cleaned it up for Xi Jinping.
Crabtree and McFatter also charge that Newsom used “behested payments” to fund a bronze bust of himself inside San Francisco City Hall. The governor calls that “categorically false,” but has not addressed his extensively documented service for China, as the authors explain, now embedded “into the operational structure of California’s bureaucracy.”
If Californians thought China wields excessive influence with Newsom it would be hard to blame them. And they have to wonder about his response to the refinery shutdowns and soaring gasoline prices.
As Katy Grimes of the California Globe contends, Newsom attacked Mische because he “didn’t adhere to California’s climate goals” and “added salt to the wounds of their currently failing gas-powered car and truck 2035 sales bans.” Californians can be forgiven for believing that the governor’s ultimate goal is a society where you get only what the government wants you to have. That helps explain why many Californians are leaving.
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Lloyd Billingsley is a policy fellow at the Independent Institute in Oakland, Calif.