The impact of the industry in California doesn’t stop at our state lines.
Our refineries also serve neighboring states. Roughly 90% of Nevada’s gasoline and 45% of Arizona’s fuel is imported from California. These states depend on us for their fuel supply, and when state policies destabilize our industry, the effects ripple across the entire region.
Yet despite abundant natural resources beneath our feet, California produces only about 25% of the crude oil we need. That’s because Sacramento has made it harder and harder to produce oil domestically, forcing us to rely on foreign imports. This reliance hurts the economy, the environment and our energy security.
California’s demand for gasoline is falling slowly, but not nearly at the rate that oil production is slowing down. Production is declining roughly 15% per year, about 50% faster than the drop in gasoline demand projected in the California Energy Commission’s most aggressive transportation fuels scenario. In short, if we stay on this dangerous path, we’re all in trouble.
Muller welcomes attendees at WSPA’s 2025 Annual Conference.
The western energy landscape: A system under strain
In recent years, we’ve watched the Western U.S., once a pillar of American energy independence, become increasingly dependent on foreign oil. Every barrel we import could have been produced right here at home under some of the world’s strictest environmental rules while supporting local jobs, strengthening our economy and reducing our carbon footprint from overseas transport.
At the same time, state regulators continue to advance policies that increase costs and discourage investment. The "margin cap" proposal, created under the false premise that refiners were price gouging, would allow the California Energy Commission to set a ceiling on refinery earnings and penalize companies that exceed it. Even though the rule has been paused for five years, the threat of a government-imposed profit cap still sends a chilling message to investors that California is an unpredictable and hostile place to operate.
Muller with Robert McNally, founder and president, Rapidan Energy Group and author, and featured speaker at WSPA’s Annual Conference.
Meanwhile, the California Air Resources Board’s "At Berth" regulation requires cargo and tanker ships to plug into shore power or install complex emission-capture systems while docked, even though most ships are not equipped to comply and the technology remains unproven and costly. That leaves shippers with only one option — paying tens of thousands of dollars each day in mitigation fees. These overlapping mandates add significant expense and uncertainty to the logistics that keep our fuel supply stable, ultimately raising prices for consumers.
Even worse, the Legislature passed and Gov. Newsom signed additional harmful laws that could require refineries to withhold fuel from consumers and potentially create artificial shortages of gasoline in California. As a result of some of California’s disastrous policies and refineries closing, in-state refining capacity can no longer meet consumer demand. Storing fuel will not solve this problem because of the simple fact that we cannot refine enough in the state. This is a harsh reality of the market that state policies have created. The state will be increasingly dependent on importing finished gasoline just to meet fuel demand.
In the 1980s, California had more than 30 refineries. Today, just six in-state facilities produce California’s unique blend of gasoline. We now find ourselves in a situation where we’re struggling to meet the energy demands of everyday Californians and the cost of gasoline is increasingly volatile and far higher than in other parts of the country.
Practical steps to stabilize California’s energy future
California doesn’t have to choose between environmental responsibility and economic stability. We can and must do both. But that requires a balanced, pragmatic energy strategy. One that recognizes that O&G will remain essential to California’s economy far into the future.
First, we need to restore local production. The Legislature took a critical step by passing Senate Bill (SB) 237, ending years of litigation that had paralyzed drilling in Kern County. This reform could allow up to 2,000 new wells per year — creating jobs, generating tax revenue and ensuring a stable crude supply. SB 237 was a step in the right direction, but there’s more to do, such as allowing California producers to use well stimulation treatments that have been proven to safely and effectively increase output.
Second, we must modernize infrastructure permitting and harmonize all levels of government to ensure adequate fuel supply. Right now, energy companies face a maze of overlapping local, regional and state processes that can delay critical maintenance and investment. Establishing a centralized permitting authority and oversight role, such as through the California Energy Commission, would streamline decisions and ensure that upgrades to pipelines, storage and refining facilities move forward safely and efficiently.
Third, the Legislature and regulators should pause or amend policies that do more harm than good. The At Berth regulation should be suspended until safe and proven compliance technologies are available and the profit margin cap should be permanently repealed to restore investor confidence and signal that California welcomes responsible operators who want to invest here. And policies like those currently being proposed by so-called environmental groups should be quickly rejected or risk further destabilization of the fuel market on the West Coast.
Muller rallies O&G workers before marching to the Capitol last year to call on lawmakers to reject rushed refinery mandates that would threaten jobs and drive up gas prices.
Finally, we need a new kind of dialogue — one that replaces politics with partnership. Energy workers, environmental advocates, community leaders and policymakers must work together to ensure that Californians continue to have access to affordable, reliable and responsibly produced energy. That collaboration should focus on supporting innovation, expanding carbon capture and storage, improving efficiency and maintaining the infrastructure that keeps our economy moving.
California’s energy future doesn’t have to be defined by scarcity, high prices and job losses. We have the technology, resources and workforce to lead — but only if we stop driving investment out of state.
Our path forward is clear: stabilize local supply, restore investor confidence, increase local production and support policies that protect consumers. Anything less risks exacerbating California’s self-imposed energy crisis — one that working families and small businesses cannot afford.
It’s time for California to choose progress over politics and secure a strong future built on an affordable, reliable supply of energy.
For more information, visit wspa.org.
