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California lawmakers pass measures to expand oil production in Central Valley, restrict offshore drilling

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California lawmakers pass measures to expand oil production in Central Valley, restrict offshore drilling

In a bid to stabilize struggling crude-oil refineries, state lawmakers on Saturday passed a last-minute bill that would allow the construction of 2,000 new oil wells annually in the San Joaquin Valley while further restricting drilling along California’s iconic coastline.

The measure, Senate Bill 237, was part of a deal on climate and environmental issues brokered behind closed doors by Gov. Gavin Newsom, state Senate President Pro Tem Mike McGuire (D-Healdsburg) and Assembly Speaker Robert Rivas (D-Hollister). The agreement aims to address growing concerns about affordability, primarily the price of gas, and the planned closure of two of the state’s 13 refineries.

California has enough refining capacity to meet demand right now, industry experts say, but the closures could reduce the state’s refining capacity by about 20% and lead to more volatile gas prices.

Democrats on Saturday framed the vote as a bitter but necessary pill to stabilize the energy market in the short term, even as the state pushes forward with the transition from fossil fuels to clean energy.

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McGuire called the bills the “most impactful affordability, climate and energy packages in our state’s history.”

“We continue to chart the future, and these bills will put more money in the pockets of hard-working Californians and keep our air clean, all while powering our transition to a more sustainable economy,” McGuire said.

The planned April 2026 closure of Valero’s refinery in Benicia will lead to a loss of $1.6 billion in wages and drag down local government budgets, said Assemblymember Lori D. Wilson (D-Suisun City), who represents the area and co-authored SB 237.

Wilson acknowledged that the bill won’t help the Benicia refinery, but said that “directly increasing domestic production of crude oil and lowering our reliance on imports will help stabilize the market — it will help create and save jobs.”

Crude oil production in California is declining at an annualized rate of about 15%, about 50% faster than the state’s most aggressive forecast for a decline in demand for gasoline, analysts said this week.

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The bill that lawmakers approved Saturday would grant statutory approval for up to 2,000 new wells per year in Kern County, the heart of California oil country.

That legislative fix, effective through 2036, would in effect circumvent a decade of legal challenges by environmental groups seeking to stymie drilling in the county that produces about three-fourths of the state’s crude oil.

“Kern County knows how to produce energy,” said state Sen. Shannon Grove (R-Bakersfield). “We produce 80% of California’s oil, if allowed, 70% of the state’s wind and solar, and over 80% of the in-state battery storage capacity. We are the experts. We are not the enemy. We can help secure energy affordability for all Californians while enjoying the benefits of increased jobs and economic prosperity.”

Environmentalists have fumed over that trade-off and over a provision that would allow the governor to suspend the state’s summer-blend gasoline fuel standards, which reduce auto emissions but drive up costs at the pump, if prices spike for more than 30 days or if it seems likely that they will.

Some progressive Democrats voted against the bill, including Assemblymember Alex Lee (D-San José), the chair of the Legislative Progressive Caucus. The bill, Lee said, was a “regulatory giveaway to Big Oil” that would do little to stabilize gas prices or refineries, which are struggling because demand for oil is falling.

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“We need to continue to focus on the future, not the past,” Lee said.

The bill also would make offshore drilling more difficult by tightening the safety and regulatory requirements for pipelines.

Lawmakers also voted to extend cap-and-trade, an ambitious climate program that sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances at quarterly auctions. Lawmakers signed off on a 15-year extension of the program, which has been renamed “cap and invest,” through 2045.

The program is seen as crucial for California to comply with its climate goals — including reaching carbon neutrality by 2045 — and also brings in billions in revenue that helps fund climate efforts, including high-speed rail and safe drinking water programs.

Also included in the package was AB 825, which creates a pathway for California to participate in a regional electricity market. If passed, the bill would expand the state’s ability to buy and sell clean power with other Western states in a move that supporters say will improve grid reliability and save money for ratepayers.

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Opponents fear that California could yield control of its power grid to out-of-state authorities, including the federal government.

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Rep. Kevin Kiley opts against challenging fellow Republican Tom McClintock

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Rep. Kevin Kiley opts against challenging fellow Republican Tom McClintock

Northern California Rep. Kevin Kiley (R-Rocklin), whose congressional district was carved up in the redistricting ballot measures approved by voters last year, announced Monday that he would not challenge fellow Republican Rep. Tom McClintock of Elk Grove. Instead, he plans to run in the Democratic-leaning district where he resides.

“It’s true that I was fully prepared to run in [McClintock’s district], having tested the waters and with polls showing a favorable outlook in a ‘safe’ district. But doing what’s easy and what’s right are often not the same,” Kiley posted on the social media site X. “And at the end of the day, as much as I love the communities in [that] District that I represent now – and as excited as I was about the new ones – seeking office in a district that doesn’t include my hometown didn’t feel right.”

Kiley, 41, currently represents a congressional district that spans Lake Tahoe to Sacramento. He did not respond to requests for comment.

But after California voters in November passed Proposition 50 — a ballot measure to redraw the state’s congressional districts in an effort to counter Trump’s moves to increase the numbers of Republicans in Congress — Kiley’s district was sliced up into other districts.

As the filing deadline approaches, Kiley pondered his path forward in a decision that was compared by political insiders to the reality television show “The Bachelor.” Who would receive the final rose? McClintock’s new sprawling congressional district includes swaths of gold country, the Central Valley and Death Valley. The district Kiley opted to run in includes the city of Sacramento and the suburbs of Roseville and Rocklin in Placer County.

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Kiley was facing headwinds because of the Republican institutional support that lined up behind McClintock, 69, who has been in Congress since 2009 and served in the state Legislature for 26 years previously. President Trump, the California Republican Party and the Club for Growth’s political action committee are among the people and groups who have endorsed McClintock.

Conservative strategist Jon Fleischman, a former executive director of the state GOP, said he was thrilled by Kiley’s decision, which avoids a divisive intraparty battle.

“If you open up the dictionary and look for the word conservative, it’s a photo of Tom McClintock. He is the ideological leader of conservatives, not only in California but in Congress for many, many years,” Fleischman said, adding that the endorsements for McClintock purposefully came because Kiley was considering challenging him.

Kiley, who grew up near Sacramento, attended Harvard University and Yale Law School. A former Teach for America member, he served in the state Assembly for six years before being elected to Congress in 2022 with Trump’s backing. But he has bucked the president, notably on tariffs. He also unsuccessfully ran to replace Gov. Gavin Newsom during the 2021 recall, and has been a constant critic of the governor.

Kiley is now running in a Sacramento-area district represented by Rep. Ami Bera (D-Elk Grove). Democrats in the newly drawn district had a nearly 9-point voter registration edge in 2024. Bera is now running in the new version of Kiley’s district.

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In Kiley’s new race, his top rival is Dr. Richard Pan of Sacramento, a former state senator and staunch supporter of vaccinations.

“Kevin Kiley can try to rebrand himself, but voters know his extreme record,” Pan said in a statement. “He has stood with Donald Trump 98% of the time and was named a ‘MAGA Champion.’ The people of this district deserve better than political opportunism disguised as moderation. This race is about who will actually fight for healthcare, public health, and working families. I’ve done that my entire career. Kevin Kiley has not.”

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Video: Defense Officials Give No Timeline for War in Iran as U.S. Boosts Forces

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Video: Defense Officials Give No Timeline for War in Iran as U.S. Boosts Forces

new video loaded: Defense Officials Give No Timeline for War in Iran as U.S. Boosts Forces

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Defense Officials Give No Timeline for War in Iran as U.S. Boosts Forces

At a Pentagon news conference, top defense officials said that the U.S. military was sending more forces to the Middle East and expects to “take additional losses.” Earlier, President Trump said that the U.S. could continue striking Iran for the next four to five weeks.

“We didn’t start this war, but under President Trump, we are finishing it. This operation is a clear, devastating, decisive mission. Destroy the missile threat. Destroy the navy. No nukes. President Trump has all the latitude in the world to talk about how long it may or may not take. Four weeks. Two weeks, six weeks. It could move up. It could move back. We’re going to execute at his command the objectives we’ve set out to achieve.” “We expect to take additional losses. And as always, we will work to minimize U.S. losses. But as the secretary said, this is major combat operations.” Reporter: “Are there currently any American boots on the ground in Iran?” “No, but we’re not going to go into the exercise of what we will or will not do. I think — it’s one of those fallacies for a long time that this department or presidents or others should tell the American people. This — and our enemies by the way — here’s exactly what we’ll do. Why in the world would we tell you, you, the enemy, anybody, what we will or will not do in pursuit of an objective?”

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At a Pentagon news conference, top defense officials said that the U.S. military was sending more forces to the Middle East and expects to “take additional losses.” Earlier, President Trump said that the U.S. could continue striking Iran for the next four to five weeks.

By Christina Kelso

March 2, 2026

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Gas prices could jump as Middle East tensions threaten global oil supply

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Gas prices could jump as Middle East tensions threaten global oil supply

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Americans could soon see higher gas prices as escalating tensions in the Middle East threaten a critical global oil chokepoint, raising fears of supply disruptions that could quickly reverberate across U.S. energy markets.

After joint U.S.–Israeli strikes, dubbed Operation Epic Fury, targeted Iranian sites over the weekend and killed Iran’s Supreme Leader Ayatollah Ali Khamenei, concerns quickly shifted to how Tehran might respond and whether oil infrastructure or tanker traffic could become collateral damage.

Any disruption to global crude supplies could translate into higher costs for American drivers at the pump.

“Every time we’ve had flare-ups in the Middle East like we’re seeing right now — and we’ve seen this kind of situation periodically over the last 50 years — it has caused significant disruption to energy markets,” economist Stephen Moore told Fox News Digital. 

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“I would expect we could see anywhere from 25 to 50 cents a gallon increase in gas prices in the short term,” he said.

Experts say Americans will likely pay more for gas due to the ongoing conflict in the Middle East. (Matthew Hatcher/Bloomberg/Getty Images)

Market data already shows prices moving higher.

Patrick De Haan, head of petroleum analysis at GasBuddy, said oil prices were up $5 per barrel, while wholesale gasoline prices had risen 11 cents per gallon.

He expects retail gas prices to begin climbing immediately, especially in areas where stations tend to adjust prices in sharp, periodic jumps.

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The national average could hit $3 per gallon as soon as Monday, De Haan said, with some stations increasing prices by 10 to 30 cents this week and potentially more in markets that see larger price swings.

Moore warned that prices could climb further and remain elevated if vital transit routes or oil facilities are disrupted.

TRUMP PLEDGES TO ‘AVENGE’ FALLEN US SERVICE MEMBERS AS TENSIONS WITH IRAN INTENSIFY

The ongoing conflict in Iran is near a major energy corridor. (Contributor/Getty Images)

“Huge amounts of global oil travel through the Strait of Hormuz, so this could be incredibly disruptive, delaying delivery of oil and gas,” he said.

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“The Iranians have already knocked out some oil facilities in the Middle East, and who knows what they’re up to next. When you have less supply, prices go up. The big question is whether this will be a temporary bump or something more prolonged.”

The ongoing conflict sits near the Strait of Hormuz, one of the world’s most strategically important energy corridors.

“This shipping route represents around 25% of global oil trade and 23% of liquefied natural gas trade,” explained Jaime Brito, executive director of refining and oil products at OPIS.

The Strait of Hormuz, a narrow shipping lane between Iran and Oman that has long been a flashpoint during regional crises, serves as a vital artery for global energy markets.

Roughly 20 million barrels of crude oil and petroleum products — about one-fifth of global oil supply — transit the strait each day, underscoring how disruption there can quickly send shockwaves through international energy markets.

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HORMUZ ERUPTS: ATTACKS, GPS JAMMING, HOUTHI THREATS ROCK STRAIT AMID US-ISRAELI STRIKES

A satellite view of the Strait of Hormuz, a critical chokepoint for global energy supply, connecting the Persian Gulf to the Gulf of Oman.  (Gallo Images/Orbital Horizon/Copernicus Sentinel Data 2025/Amanda Macias/Fox News Digital)

Highlighting the growing concern, Maersk, widely regarded as a bellwether for global ocean freight, said it will suspend all vessel crossings through the Strait of Hormuz until further notice and cautioned that services to Arabian Gulf ports may be delayed.

Still, not all price movements are immediate.

“Developments over the weekend in the Middle East should hypothetically take time to ripple into the global supply chain. An initial assessment would suggest no specific price impacts should be seen in the gasoline market across the world, including the U.S.,” Brito told Fox News Digital.

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However, Brito said prices could climb quickly if markets expect trouble ahead, even before supplies are actually affected.

As a result, Brito said, developments in Iran may have already translated into higher gasoline, diesel and other fuel prices in parts of the U.S., depending on regional supply dynamics and individual company pricing strategies.

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Experts say the increase in gas prices will be largely determined by how long the conflict in the Middle East lasts. (John McCall/South Florida Sun Sentinel/Tribune News Service via Getty Images)

From a domestic standpoint, Brito added that gasoline prices follow a seasonal pattern, typically climbing during the summer travel months.

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“March prices are not expected to be significantly high,” he said, noting that spring break travel could support demand in certain areas — but not at the level seen during peak summer driving season.

Ultimately, the direction of gasoline prices will depend less on seasonal demand and more on how the geopolitical situation unfolds in the days ahead.

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