California is facing an undeniable energy crisis.
Gas prices here are far above the national average and electricity rates are steadily increasing, putting too much pressure on working families. Decades of aspirational — but unrealistic — environmental and energy policies have crushed vulnerable communities throughout the state. This isn’t climate leadership; it’s a warning to others considering going down a similar path.
How can we begin to reverse the damage caused by California’s overly aggressive, costly environmental policies and regulations? Fortunately, that conversation is underway but meaningful steps to stabilize California’s fuel market will require more than talk. Policymakers, regulators and the administration need to work with urgency to provide the right market signal for investor confidence and the solutions necessary to provide real relief for the O&G industry and drivers in California and our neighboring states.
Somehow, over the last twenty years, the fact that affordable and reliable fuel sources are critical to California took a back seat. Suddenly, with a supply crisis on their hands, legislators and the administration became a little more focused on the role our industry plays in keeping the state moving forward.
Not only is the O&G industry necessary to keep our state moving. It is also the foundation of our economy. O&G supports good-paying jobs and provides billions in tax revenue. According to a report by the Los Angeles County Economic Development Corp. Institute for Applied Economics, in 2022, the industry supported 536,770 jobs and contributed $338 billion to California’s economy. O&G-related revenue pays for infrastructure and critical services that residents rely on. And demand for fuel, which supports jobs and revenue, isn’t slowing down any time soon — Californians continue to consume about 1.8 million barrels of oil every day.
At this point, even some of the staunchest critics of our reliance on O&G are waking up to the economic and practical realities facing our state. What is sinking in is that the transition to a sustainable energy future must work for everyone, or it works for no one. As such, California has reached a critical point. We are in urgent need of policy directives that send signals to energy-industry investors that California is a place where they can do business.
For our industry, restoring investor confidence begins with efforts to support in-state crude oil production. This is essential to strengthening fuel supply, not just for California but also for our neighboring states. Eliminating barriers that have squashed access to drilling permits will be crucial to keeping our fuel supply intact. We have significant in-state crude oil reserves in Central California — we just need permits to access them.
To be clear, California producers and refiners operate under the nation’s strictest environmental standards. We can produce safe, reliable and affordable energy right here in our state. Unfortunately, local production has dramatically decreased due to politically driven lawsuits that weaponize the California Environmental Quality Act (CEQA). California has plenty of crude to support our energy needs, but CEQA litigation has stalled oil extraction and increased our dependence on imports.
Giving up on in-state oil production isn’t an option — it would wipe out good paying California jobs, make us vulnerable to geopolitical tensions overseas, restrict crude oil flowing to in-state refiners to make needed gasoline, diesel and jet fuel to meet California’s demand. Why not produce energy here, with strong labor and environmental standards, and projects that drive local economies?
Additionally, uncertainty for investors has been propelled by stringent and inconsistent requirements from various agencies. California’s regulatory climate has resulted in confusing project delays and added costs to refiners, underscoring the very thing investors hate most — risk.
The lack of coordination between state, regional and local regulators has become a costly catastrophe. Stronger collaboration with local communities, labor groups, regulators and industry stakeholders will result in smarter implementation and better policy outcomes for everyone.
It is essential that we incentivize market driven solutions that encourage the development of new technologies, while also maintaining a reliable petroleum infrastructure that supports our energy needs today and in the near term. Collaborative policies supporting this transition will restore investor confidence and ensure an adequate supply of fuel to meet consumer demand.
This is a critical moment. Technical realities, if unaddressed, get in the way of aspirational dreams and hope is not a plan. California has a chance to restore trust and form a strong partnership that fuels economic progress, protects jobs, addresses affordability issues and supports a reliable, sustainable future. The time to act is now.
For more information, visit wspa.org.
