From Energy Security and Freedom

Guest Post by Makenzie Huber of South Dakota Searchlight via ESG University.

Hundreds of people, many of them opponents of a carbon dioxide pipeline, filled the Southeast Technical College auditorium Wednesday evening for a state Public Utilities Commission hearing regarding a second attempt by Summit Carbon Solutions to gain a permit for the project.

“We know this is an incredibly important issue to you,” said Commissioner Gary Hanson at the start of the three-hour meeting. “We are here today to learn and listen, and we appreciate each of you being with us today to give us your input.”

The Iowa-based company plans a 2,500-mile, $9 billion pipeline to capture carbon dioxide from 57 ethanol plants across five states, including eastern South Dakota, and transport it to North Dakota for underground storage. The project would capitalize on federal tax credits incentivizing the prevention of heat-trapping carbon emissions.

The commission rejected Summit’s first permit application in 2023, in part due to the pipeline route’s conflicts with local ordinances mandating minimum distances between pipelines and existing features.

The project has a storage permit in North Dakota and route permits in North Dakota, Iowa and Minnesota, while Nebraska has no state permitting process for carbon pipelines. The project also faces litigation from opponents in multiple states.

The Sioux Falls meeting focused on residents in Minnehaha, Lincoln, Turner and Union counties. The commission held another meeting in Mitchell earlier in the day.

Most of Wednesday’s attendees opposed the pipeline — evident by applause often filling the room after opponents spoke. The opponents who spoke primarily reiterated concerns about safety and impacts to farmland affected by the pipeline’s planned route, which were raised during the company’s initial attempt at a permit.

Opponents also spoke against efforts to designate the pipeline as a common carrier, which would allow the use of eminent domain to push the project through. The South Dakota Supreme Court ruled last year that the pipeline has not yet proven it should be allowed to take private land for public use. The high court sent the case back to a lower court, where the company is trying to prove its case.Subscribe

Meanwhile, some state lawmakers have proposed legislation to ban carbon pipelinesfrom using eminent domain.

Betty Strom, whose property would be crossed by the pipeline, said it would be a “forever hazard across my land.”

“Summit is in it for the tax credits. They don’t care about property rights, safety, the damage to property, its value or the long-term consequences,” Strom said. “Please deny this permit again.”

Representatives from Summit explained why the route was selected and reviewed safety regulations and standards for the pipeline.

In a handout, Summit said the project would include $1.9 billion in capital expenditures in South Dakota, add 3,000 construction jobs while the pipeline is being built and support 260 jobs annually.

Project supporters said it would provide economic opportunities to South Dakota if implemented.

Al Giese, an Iowa farmer, board member for the Iowa Renewable Fuels Association and owner of a feed and trucking company doing business in South Dakota, told the commission that the “carbon sequestration train, locally and nationally, has left the station.”

“Yes, it is a South Dakota issue. It is a Midwestern issue. But we must move forward with sequestering carbon not only for the vitality of the ag sector but for all the economies in the Midwestern states,” Giese said. “There’s no other way to go about it.”

The next public hearings will be in De Smet and Watertown on Thursday, and in Aberdeen and Redfield on Friday.

Makenzie Huber is a lifelong South Dakotan who regularly reports on the intersection of politics and policy with health, education, social services and Indigenous affairs. Her work with South Dakota Searchlight earned her the title of South Dakota’s Outstanding Young Journalist in 2024, and she was a 2024 finalist for the national Livingston Awards.

South Dakota Searchlight is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

ESG University republishes their articles, features and stories online and/or in print under Creative Commons license CC BY-NC-ND 4.0.

California’s energy policies have been walking a tightrope for years, but now, the state is contemplating an extreme measure that could tip it into full-blown crisis mode: taking over oil refineries. According to a recent Los Angeles Times article, California policymakers are seriously considering state ownership of refineries to ensure gasoline supply remains stable as private refiners shut down operations​. This move—if it happens—could create a cascade of economic and logistical disasters, exacerbating the very problems the state claims to be solving.

The Reality of Refinery Closures

California’s gasoline demand has been in gradual decline due to more efficient engines and an increasing number of electric vehicles (EVs) on the road. However, demand is still high enough that losing refineries without a reliable replacement strategy could create severe shortages​.

Major refiners—including Chevron, Marathon, Phillips 66, PBF Energy, and Valero—are facing mounting pressures from the state’s aggressive environmental regulations and shifting market incentives. Some have already transitioned away from gasoline production, while others are contemplating permanent shutdowns.

The Phillips 66 refinery in Wilmington is set to close by the end of the year, and more refineries could follow. The result? A shrinking gasoline supply in a state that still heavily relies on fossil fuels. As Skip York, chief energy strategist at Turner Mason & Co., put it:

“Demand will decline gradually, but supply will fall out in chunks”​.

This mismatch between supply and demand could lead to fuel shortages, price spikes, and logistical nightmares—none of which the state seems prepared for.

State Ownership: A Disaster in the Making

In response to the looming refinery crisis, the California Energy Commission has put together a list of possible solutions, including:

• State ownership of oil refineries
• State purchase or lease of ships for gasoline imports
• Contracts with out-of-state and foreign refineries
• Increased gasoline shipments via train
• Changes to California’s strict fuel regulations
• Encouraging neighboring states to adopt California-grade fuel standards​

The most extreme option—state ownership—would put California in the company of countries like Venezuela and Iran, where government-run refineries are the norm. And we all know how efficiently those economies function.

The Western States Petroleum Association has already raised concerns about the feasibility of such a move:

“This is a very complex and hard business to run… There are commercial barriers and technical barriers that take a comprehensive and holistic understanding of the industry”​.

The idea that state bureaucrats—many of whom have spent years waging war against the oil industry—could suddenly turn around and competently manage a refinery is laughable. Running a refinery requires expertise, efficiency, and adaptability—qualities not typically associated with government-run enterprises.

Why California’s Energy Plans Are Doomed to Fail

California’s regulatory framework has been hostile to the oil industry for years. Recent policies include:

• Banning the sale of new gasoline-powered vehicles by 2035
• Potential penalties on refinery profits
• New minimum storage requirements for refiners​

These policies are making it increasingly unprofitable to operate refineries in the state. Chevron, a California staple since 1879, has already announced plans to move its headquarters to Texas. In a statement, Chevron executive Andy Walz summed up the problem:

“Recent California policies… erode our confidence going forward”​.

This should be a wake-up call. But instead of reassessing its approach, California seems determined to double down.

The Supply Chain Nightmare

Unlike other states, California is essentially a “gasoline island.” It lacks a multi-state logistics network to mitigate supply disruptions. There are no pipelines bringing gasoline in from neighboring states, and the antiquated Jones Act restricts ocean shipments from the refinery-rich Gulf Coast.

Right now, California imports only 8% of its gasoline; the other 92% is refined within the state​. If more refineries shut down, the state will be forced to import significantly larger quantities of gasoline—most likely from Asia. That means:

• Higher transportation costs
• Increased vulnerability to global supply chain disruptions
• Potential price volatility tied to international markets

And yet, while California regulators push for the closure of in-state refineries, no one seems concerned about the environmental impact of importing gasoline from across the Pacific. As Assembly Republican Leader James Gallagher pointed out:

“People freak out about the environmental impacts of crude oil shipments, but no one’s freaking out about the environmental impacts of gasoline imports”​.

What’s the Endgame?

State Senator Brian Jones put it bluntly:

“The state has no business being in the oil refinery business”​.

Yet here we are, discussing the possibility of California taking over one of the most complex industries in the world—all because its policies have made it impossible for private refiners to operate profitably.

The obvious solution would be to ease regulatory burdens, allow market forces to work, and support energy diversity rather than forcing an abrupt transition to EVs. But California’s leadership seems determined to force a radical transformation, regardless of the cost.

The result? Expect higher gas prices, more shortages, and a government scrambling to fix problems of its own making.

California is walking a dangerous road, and if state-owned refineries become reality, the fuel crisis could get far worse before it gets better.