In the face of the worsening cost of living crisis in California and warnings of a potential 75% increase in gasoline prices, state lawmakers passed a package of bills over the weekend aimed at addressing energy costs, fuel supply, and pollution issues, sending them to Governor Gavin Newsom for signature.
Newsom stated in a release that after months of efforts by the legislative body, California has passed historic reforms that will save residents on electricity bills, stabilize gasoline supply, reduce toxic air pollution, and accelerate the state’s transition to a clean, green, job-creating economy.
One of the bills, SB237, aims to pave the way for oil extraction in California’s Central Valley. The region holds the state’s largest oil reserves and is currently the largest oil-producing region in California. Legal battles and regulations had almost halted local oil production before, causing refineries to relocate.
This bill certifies an Environmental Impact Report (EIR) for Kern County, which had been tied up in litigation for at least a decade, temporarily exempting drilling activities from environmental review and paving the way for approving up to 2,000 new drilling permits annually.
This marks a significant shift in Newsom’s “decarbonization” stance, partly due to the closure of two refineries and the state’s increasing reliance on foreign fuel imports as pipeline transport capacity dwindles, posing risks of infrastructure collapse.
In 2023, Newsom, along with California Attorney General Rob Bonta, sued the state’s largest oil producers, alleging they caused or exacerbated “climate change-related harms,” such as severe droughts, floods, and wildfires. The case is ongoing.
Republican State Senator Shannon Grove from Kern County expressed her gratitude to the governor for listening, understanding the situation they face, and having the courage to take immediate action to stabilize fuel prices for all Californians. She emphasized the need to unlock Kern County’s oil potential to meet energy demands affordably.
Inside the state legislature, many Democratic lawmakers described SB237 as a painful compromise to avoid an economic crisis.
Democratic Assemblywoman Lori Wilson acknowledged the harm refinery closures cause to communities, citing the impending closure of the Valero refinery in Benicia, which her district represents. She mentioned the closure of the Phillips 66 refinery in Los Angeles in 2024, noting that since 2008, six refineries had shut down in California, with two transitioning into renewable diesel facilities. Wilson highlighted the high operational costs and stringent state regulations as reasons for the closures.
Wilson mentioned that the closure of the Valero refinery would affect union workers, leading to a $1.6 billion loss in employee wages and straining local government finances for years to come. She stressed that although SB237 may not directly benefit the refineries in her district, increasing domestic crude production and reducing imports would help stabilize the market, create and save jobs, and prevent price spikes from international market fluctuations.
Democratic Assemblyman Gregg Hart praised SB237 for strengthening restrictions on offshore drilling while simplifying approvals for inland oil production. He explained, “Offshore, we enhance regulation to prevent irreversible harm to the coast; inland, we end a 10-year litigation under the California Environmental Quality Act and take steps to restrict it rigorously, allowing Kern County to manage oil production more efficiently.”
In an August 20 briefing to lawmakers, the California government acknowledged the relative shortfall of California crude oil supply compared to demand, primarily due to the CEQA litigations in Kern County, causing delays in well drilling permits in a fossil fuel hub.
California is one of the regions globally with the highest recoverable oil reserves, alongside having the strictest oil and gas regulations in the United States. Its carbon-rich heavy crude is refined into gasoline, diesel, aviation fuel, among others, blended to meet stringent environmental standards.
The government aims to stabilize local oil supply at around 30% of its overall consumption to prevent further refinery closures.
Grove noted that when she first became a state assemblywoman in 2010, 3,000 new drilling permits were issued annually, with an average gasoline price around $3.12 per gallon. She recalled a prosperous district with ample employment where families were buying homes and nonprofits were receiving funding.
However, in the past three years, the number of approved new drilling permits dropped to less than 87. Grove reflected, “As these permits have dried up each year, thousands of my constituents have lost good jobs… They’ve lost homes, moved away from their communities, following the industry elsewhere.”
Democratic State Senator Jerry McNerney stressed that the ultimate goal of this compromise is, “If we can’t guarantee affordable gas prices, we lose public support, and in turn, we lose the fight against climate change.”
Grove highlighted that the EIR ensures mitigation measures would achieve net-zero carbon emissions, stating that regardless of how much oil is extracted, it would not increase carbon emissions. She emphasized that Kern County not only produces 80% of the state’s oil and gas but also provides nearly 60% of wind and solar energy and over 80% of battery storage.
Newsom has until October 13 to sign SB237 and other bills to enact them into law. ◇