California regulators on Thursday approved a nearly 60 percent increase on what oil producers must pay to use the only pipeline carrying crude oil from the state’s oil fields to Bay Area refineries. The rate hike is an attempt to save a flagging centerpiece of the state’s oil infrastructure, although the pipeline’s operator said it may close it if business does not pick up quickly.
What happened: The California Public Utilities Commission adopted an emergency relief measure that will raise the rates on the San Pablo Bay pipeline system from $2.36 per barrel to $3.75 per barrel — a 59 percent jump.
Why it matters: The pipeline is a “critical part of California’s crude oil infrastructure,” the CPUC wrote in its decision, since it is the only connection between the heart of oil production in Southern California and refineries in the north. If it closes, it will leave the state’s oil system more vulnerable to major disruptions and could force producers to seek alternative means of oil transportation, such as trucking.
Context: Oil producers stopped shipping product through the pipeline in December, according to Robert Waldron, the CEO of CorEnergy Infrastructure Trust, which owns the Crimson California Pipeline company that operates the pipeline.
