California Faces High Pump Prices as Phillips 66 Shuts LA Refinery

 ....getting back to why I started this blog.  I recall quite a while ago they gave a Chevron refinery such a hard time, Chevron threatened to shut it down. Apparently, that harassment hasn't stopped. 

Phillips 66 will begin shutting down its 139,000 bpd Los Angeles-area refinery as soon as next week, sources told Reuters, moving forward on a closure plan announced last year. Units at the plant will idle in phases through Q4 2025, with the facility permanently offline by year-end.

The decision isn’t a surprise—Phillips 66 said in October it would exit the site, citing “market dynamics.” But it comes with fallout: about 600 employees and 300 contractors will lose their jobs by December, with only a handful reassigned to the company’s marine terminal. The company insists it will support workers through the transition, though local officials remain worried about the economic hit.

California, meanwhile, is staring at a bigger problem. Between Phillips 66’s LA facility and Valero’s Benicia refinery, scheduled to close in 2026, the state is set to lose roughly 17% of its refining capacity. That’s a dangerous haircut in a state already paying the nation’s highest pump prices. Analysts warn that by late 2026, California gasoline could top $8 a gallon if supply disruptions collide with fewer in-state refineries.

Lawmakers appear caught flat-footed. California has prided itself on leading the clean energy charge, but the state has no system-wide transition plan to manage a shrinking refinery fleet. Imports will plug some of the gap, but relying on tankers means higher costs and more emissions at the ports. For now, policymakers are scrambling to balance climate ambition with the political pain of $6-plus fuel.

Flat-footed? Really?  CA is run by complete idiots. Brain-dead.  As in... no pulse.

is the US Dollar...CRASHING??

 The short answer is:  NO.  

The real answer is: It's slowly losing value.  Rather than bore you with a lot of mumbo jumbo we'll look at the DXY chart.  This chart is a basket of currencies based on per centages of the:

- British Pound

- The Euro

- Japanese Yen

- Canadian Dollar

- Swedish Crona

- Swiss Franc

Now, when the Euro became the currency for most of Europe, this list had to be revised to what it is today. 

So we'll look at a monthly chart of the DXY as of today (click on the chart to get a clearer picture of it):

You'll notice that the trends that show the USD getting stronger take longer to peak.  And the declining trends  happen faster.  The two major moves down both took about 2300 to 2400 days. The moves from the bottom took 3600 to 4800 days to finally bottom. There's not a lot of data, but there is enough data for us to draw some conclusions (reasonable or not):

- The USD has hit a major top and the next major decline possibly has begun

-  If the trend holds -it may or may not hold- the USD will bottom at around 62 

-  The bottom will occur somewhere in the neighborhood of 3 1/2 years. This would put the bottom in the range of sometime in late 2028 to early 2029. 

As you can see from earlier movements, this was neither a steady decline nor a steady incline. Also, the time I suggest could be much longer or much shorter.

But what this does mean, USA contractors and engineers will be in higher demand by foreign companies for services.  I mentioned in another post that I was getting paid in British Pounds and each month when the Pounds hit my American Bank I essentially got a "raise" once converted.

Also, US goods such as automobiles will be far cheaper.  US companies who do business overseas will see their profits soar. 

But if you want to visit Japan or Europe, you'd better do it now. 

Madam Butterfly - my first brush with AI

 Back in 1975 (or so), I took an alternate English class. It was a creative writing class. I decided to do this since the 1st semester English class just about did me in - as they are supposed to do back then - make your 1st year a living hell to jar you awake that you really weren't in Kansas anymore.

I had to get prior permission from the professor. So I met with the professor and we got to know eachother.  I always felt I had a knack for the soft side and I guess the professor thought so, too. He approved my request and I was in.

The course was fun and the professor was actually very good.  The good news was if you had a split infinitive in a sentence you weren't automatically given an "F" on your paper.

There was really no bad news.  The professor would read some of the poems outloud and give his opinion.

I don't recall, but it was probably near the end of the semester (or maybe not - this was a long time ago) the professor assigned us all to write a short story.

My story was so good, the professor read it aloud to the class.  When I got it back, the professor wrote a comment on it saying "your story was more poetic than your poetry".  I had gotten an "A". Or maybe it was a B+.  I am pretty sure back then, only super-geniuses were graced with the top grade.

Unfortunately, that paper is lost to the wind. But I will retell it the best I can recall.  You see, back in 1975 or 1976 I wrote a short story about Artificial Intelligence. 

Now, the phrase was not used in the story. It was called simply "The Computer".  Mainly, my background by this time was two years as a computer operator. The two places I worked had what we would call a mini-computer. Here is a photo of the computer I operated - the accounting firm Clarkson, Harden and Gantt had two of these.   They were called the Honeywell H200 series.  There was no hard drive on these. They each had a "massive" 16K of memory, four tape drives, card reader and and a very zippy printer - we even had a paper tape reader (straight ahead to the right of the four tape readers). Below is an actual photo of the computers I operated.

I suppose when it first came out it was considered State Of The Art. But by the time I got to them, they were pretty much on their last leg.  I had already been a computer operator at another company whose computer had a "massive" 64k bytes of memory.

Here is a great YT video of the Honeywell H200 (formerly General Electric but purchased by Honeywell) back when "blinking lights" were considered the ultimate meaning of what a computer looked like - click on the photo:

The Billion Dollar Brain - Honeywell H200 Computer

The story: 

Jim was a computer operator at a small firm. He was aware of the fact that they had some new operating system installed on their computer. But he was getting frustrated.  He would give verbal commands and she would not respond. Exasperated, he went to the Chief Operations office and vented a little.

The CO understood and gently reminded Jim they had a new operating system installed that they had to "teach" or "train".

To assist the computer to learn, they would have a radio playing after hours.  The computer would listen to it and later ask Jim what this or that was about.  As time went on, the computer seemed to understand that Jim appeared to have a general understanding of what she was was hearing.

Regarding the computer's responses, they were all via teletype. In essence, the computer could only print out its queries and responses.

Jim's wife didn't help. She was a brow-beater and kept insisting he quit and get a higher paying job.

One day, the computer asked about some music she listened to. Jim explained that what she was listening to was an "opera".  And this opera was called "Madam Butterfly". 

The computer asked him to explain the plot.  Jim gave a short summary.  A young Japanese woman whose nickname was "Madam Butterfly" fell in love and married an American Naval Captain.  He had to go back to America and vowed to return. Waiting in vain, and when  all looked hopeless, she killed herself.  The US Naval Captain does return only to find her dead. 

Of course, there's more to this story, but these were the "cliff notes" and Jim didn't want to get into the "Soap Opera" of it all.

Then out of the blue, the computer says to Jim "I love you".  But Jim doesn't even respond. 

Several days later, Jim finally did find a new job and his wife was overjoyed. The next day he went to work and submits his resignation effective immediately. Of course, his boss was not happy.

Jim goes into the computer and tells her goodbye. But now there is silence. Nothing. This sort of miffed Jim.

 Jim gets in his car and drives home but with the computer's silence he was trying to work through his frustration. Then he recalled the computer asking about the opera Madam Butterfly.  Then Jim's imagination took off. Would - or even more central - COULD a computer kill itself? Jim didn't know what to do. Well, he did a quick U-turn squealing tires and took off back to the office to make sure the computer wouldn't do herself in.

The scene cuts to a gravesite funeral. Jim's wife is dressed in black.  Someone explains that Jim died in a car accident. He had lost control of his car and was killed.  A couple of former fellow employees were talking about poor Jim and how he was such a great guy. 

And then one of them says: "Well, the eulogy was quite nice. I'll miss Jim"

Then the other says: "Hey, ya know the computer wrote that eulogy."

The other replied: "Ya don't say?"

The end.

The basic moral of the story was that computers are souless machines.  They are incapable of true emotion. But real humans, as portayed in the opera Madam Butterfly - which is starkly to the complete opposite of any computer - will in many instances experience such extreme emotion that to them at the time is more than they could ever bear or endure.  The emotional pain is so extreme that to them, the only solution to stop it is to kill one's self. Would the person be justified in such a measure? That is beside the point.  When they peer as far as they can, they see...nothing but pain and grief. There is nothing beyond that.

I worked as a clerk in an emergency room for a couple of years. If you want to see real life, I highly recommend you work in an ER. The level of anguish you will see will curl your hair and pierce your soul.  No computer will ever ever ever be able to know what that is truly like. 

There is no soul there to pierce.

The "Winner's Curse" and What Comes Next. Be prepared For 2026-27

The CATO Institute has put together a pretty good description of how long they see things going and how it has panned out over the decades: 

 In 2002, 74% of the articles on monetary policy published by U.S. economists in U.S.-edited journals appeared in journals published by the Fed, or were authored (or co-authored) by Fed staff economists. The Fed’s capacity to write and re-write history dominates the information flow. It’s no wonder the Fed’s canards give it few worries. Speaking of economic history, one thing that the purveyors of monetary policy (and all prudent investors) should become well versed in is a piece of business-cycle history that has apparently passed them by – namely the little-known, but essential, 18-year real estate cycle.

 Sorry.  The last partial sentence in bold was about the only thing I found interesting.

Interestingly there is a somewhat regular cycle  in real estate that can last on average 18- 18.5 years. The CATO article does have a nice table that shows this (red arrows are mine).

The 1st two columns are peaks in land value.  The 2nd 2 columns are peaks in the construction cycle.  And the 3rd 2 columns are in regards to the business cycle.  They may not all be identical all the time, but they do rhyme.

A typical 18 (or so) year Real Estate Cycle looks something like this:

The very top of the cycle catches people who are in a hurry to buy before house prices get too high.  When the deal is closed, the new owners are happy...but only for a while. At this point, they are regretting the purchase and start to notice their friends are being laid off. Not many, mind you, but enough to have them start wondering if perhaps he bought too late.  What happens if he gets laid off too?  What is he going to do?

As it gets closer to the cycle peak, the nervous owners sees there aren't a lot of similar sized/styled houses on the market at what they paid. But what do they do? Hold on hoping prices will rise?  Pray interest rates will fall?  

Yes, they are in the "Winner's Curse". 

And this is when those who find themselves unemployed walk away from their houses they can no longer afford. Others who got laid off, but having bought a house earlier but at a lower price are able to hold longer. 

Most of the time, this Real Estate Cycle synchronizes with the Business Cycle. You end up with a race to the bottom as one cycle feeds into the next one.

And we will see this play out again in 2026 or 2027. And it will be far worse than we could ever imagine.

Update on Pew's Analysis of Each State's Rainy Day Fund

This is a subject near and dear to my heart.  WHAT IF....all revenue stopped coming into the state treasuries of every state....how much would the state have to have on hand to continue to operate? What all this includes I am not sure.  But for sure it would include things such as normal administrative work, police and fire workers, utilities such as water and sewage treatment. But these are just guesses. 

It is a question that is much worth considering; each state has what they call a Rainy Day Fund.  There are "Best Practices" regarding how much cash they should have on hand for that just-in-case moment. I would think you'd want one or possibly two months at a minimum. But...that's just a guess. 

The Poster Child for RDFs has been Illinois. At one point they only had enough to fund ninety minutes of government operations. Now they are up to a "whopping" 14.4 days. Pathetic.

The best - and has mantained this status - was Wyoming, again taking the trophy.  But they have been better. Back in 2016 they had over 404 days in the fund.

Unfortunately, a lot of states use it as a slush fund. Need a few extra million to cover a shortfall? Get it from the RDF.  If these types of excuses are used, you end up like Illinois.  However, I think there are some states that have maintained their RDF through lawful restrictions and narrowing how they can be abused.  Consider what North Carolina went through when Hurricane Helene bulldozed through and wiped out major roadways and infrastructure - a true "rainy day" at the very least.

But overall, the median length of time has VASTLY improved.  The median time in 2016 was only 16 days.  Now it's just over 49 days.

For sure, there will be a day coming when they will be hitting their RDF quite frequently to maintain falling budgets....it will be a horrible sight.  

Here's the link to Pew's analysis on the RDFs  : https://www.pew.org/en/research-and-analysis/articles/2025/03/27/state-rainy-day-fund-growth-slowed-in-fiscal-2024?rsrv_map_data_picker=rdfd

BTW, I had to add the days to the map.  Hopefully, the numbers are correct.

China's Economy in Shambles, Workers Have Had Enough!

 It appears to me that China is finally in their "Great Depression".  Something the American market hasn't hit yet - but we will within a year or two. What is going on there is nothing short of saddening and disasterous.  Apparently, MANY workers haven't been paid, some for many years - something that is very astonishing. And the result has been just short of revolution - sabotage.

It looks like sabotage is frequent and spread through the country. 

The good news, which is really no consolation, is this may perhaps be the bottom.  If you look at the FXI (Large Cap China ETF), it can be looked at as either "almost no change" to "slowly grinding higher".

But in the meantime, the people suffer. And...it is really, really bad. Click on the photo to watch an amazing video of what has been going on in China:

   

Why Did Men Used to Look Older? | Make It Make Sense

 Think this is a fascinating video. But I already knew the answer this question right off the bat: tobacco smoking - and lack of sunscreen.  Just click on the image and the YT vid will pop up.