California
Oil prices are skyrocketing, but this is why companies won’t rush to drill in California
If you are an oil producer with wells in California and global oil prices have risen to over $100 a barrel in the last week, are you going to drill new wells?
It’s a question that touches the lives of hundreds of thousands of Californians who either live near oil wells or receive royalty checks as mineral rights owners.
Experts said probably not, given this state’s aging fields and the unpredictability of global prices.
It’s too early for data that will show if companies have ordered more drilling rigs on their fields — known as the rig count — since the U.S. and Israel invaded Iran and sent oil prices soaring. But analysts and producers say only if prices stay above $80 for at least a year do they expect an increase in drilling.
“Nobody expects today’s high prices to last and we could very likely get back to the low $60 [per barrel] environment we faced just a few weeks ago,” said Rock Zierman, chief executive of the California Independent Petroleum Assn. trade group.
Experts say the unique geology of California’s fields, and the nature of its heavy crude, make new projects, and efforts to pump more oil out of existing ones, costlier and more energy-intensive than drilling in other parts of the country.
In the Permian basin of New Mexico and west Texas, for example, producers can more quickly and economically ramp up extraction of light crude oil trapped in shale rock.
But even there, “operators are wary of adjusting plans to spend more drilling capital if prices come back down after the conflict ends, which is currently suggested by the oil price curve,” said Matthew Bernstein, vice president of North America oil and gas at the consulting firm Rystad Energy.
“Instead, companies will enjoy the added cash flow buffer of higher prices and boost cash on their balance sheets and pay out shareholders,” he said.
California oil production has been on the decline since the 1980s, largely because existing oil fields are becoming depleted and there are more economical places to produce.
At a certain point, that can begin to hurt the whole local business ecosystem of oil wells, pipelines and the refineries that turn crude oil into gasoline, jet fuel and diesel.
Last April, Valero announced its intentions to take its Benicia refinery offline next month, citing a difficult regulatory environment. Phillips 66 in Wilmington shuttered in December, blaming market dynamics.
That same month, the San Pablo pipeline, the sole line connecting Central Valley oil fields to refineries in the San Francisco Bay Area, also shut down, citing low oil volumes and a loss of refinery customers. Drillers started sending their product north in trucks.
In September, in an effort to boost pipeline throughput, Gov. Gavin Newsom signed a bill to streamline permitting for up to 2,000 new oil wells in Kern County, where new permits had been held up in litigation since 2020.
Since that took effect this year, the California Geologic Energy Management Division has permitted 139 new wells in Kern County, more than the 121 wells permitted from 2023 to 2025 across the state.
That signals “an appetite to drill,” said Matt Woodson, an analyst at Wood Mackenzie. But oil companies, which lobbied for the change, are still blaming refinery and pipeline closures, as well as the lower prices fetched by California crude compared with imports, for limiting projects.
“A temporary bump in price is not enough incentive to overcome the uncertainty of whether or not we can get our oil to market,” Zierman said.
Chevron, which operates two California refineries in addition to some of the state’s largest oil fields, said the permits were a welcome change but that proposed updates to the state’s cap-and-trade program that would make refiners pay more to pollute “threaten to reverse any kind of benefit that the industry has received.”
California Air Resources Board officials say the updates were designed to keep fuel supplies reliable and affordable “throughout the transition to carbon neutrality.”
Analysts expect a slowed but ongoing decline of oil, in line with the intentions of the state.
“I think you can start to stabilize that a little bit to where production declines slow,” said Robert Auers, an analyst with RBN, of the new permits. “But I would be shocked to see actual production growth. It’s more just ‘what’s your decline rate?’”
It’s dicey to balance. Last year, the California Energy Commission identified declining crude production as a problem for local refineries, which produce 90% of the gasoline used in the state.
In a letter to Newsom in June, commission Vice Chair Siva Gunda said the main factors driving refinery closures were falling demand for gasoline, increasing competition from global consolidation, aging infrastructure requiring significant maintenance, and a high cost of operating.
But he also warned that low in-state oil volumes could contribute to refinery instability because even though California refineries import about 75% of their oil, some of them are engineered for the specific qualities of California crude.
Refinery instability is a problem, Gunda wrote, because additional closures could “outpace demand decline for petroleum based-fuels,” leading to future price spikes.
In other words, California is trying to transition away from oil-based fuels, but the gasoline can’t disappear faster than people are giving it up.
Several experts have said that instead of trying to drill, the state should move to reduce its reliance on the California’s teetering refineries that have what UC Santa Barbara professor Paasha Mahdavi called a “cartel-like” market hold over the state.
That looks like boosting public transit and electric vehicles, but, in the shorter term, it could also mean improving California’s capacity to import more finished gasoline from abroad and other states, where prices are typically lower. Already officials are looking into a project from Phillips 66 and pipeline giant Kinder Morgan that could deliver gasoline, diesel and jet fuel from as far as Missouri by 2029.
“Let’s just be like the rest of America,” said Mahdavi, who directs UCSB’s Energy Governance and Political Economy lab. “Let’s quit this energy island that we’ve created for ourselves, because we’re not connected.”
Whether energy companies drill more in the U.S. or not, he added, it’s not going bring down the high price of gasoline, which is driven by crude oil prices set on the international market. To shift the needle there, you would have to meaningfully add to supply to replace the 20 million barrels per day being cut off by Iran, and any new production isn’t going to do that.
California
Could tea be California’s next cash crop? Take a taste March 19 | Food Blog
Public invited to learn about potential for new crop at Kearney REC Tea Day
Learn about tea culture and cultivation in California’s Central Valley climate at Tea Day on Thursday, March 19, at UC Kearney Agricultural Research and Extension Center, south of Fresno.
Tea is the most widely consumed beverage in the world, aside from water, and can be found in almost 80% of all U.S. households, according to the Tea Association of the U.S.A., Inc. More than 160 million Americans drink tea. Yet tea isn’t grown domestically.
Atef Swelam would like to see California growers capitalize on this untapped market.
KREC Director Atef Swelam would like to see California growers capitalize on this untapped market.
“We import about 120 million pounds of tea into the U.S. annually, spending about $6 billion,” said Swelam.
As San Joaquin Valley farmland is retired to comply with the state’s Sustainable Groundwater Management Act, Swelam sees the niche crop as a way growers can maximize profit per acre.
Swelam is inviting growers and tea drinkers to see the tea plants growing at Kearney REC, learn about the history of tea in California, explore opportunities for growing and marketing the crop and engage in a sensory experience with teas brewed from varieties grown at the research center.
Tea was first planted at Kearney REC in 1967, when the Lipton tea company funded a tea research project. Although that project ended in 1980, the center has continued to grow and study tea.
UC scientists will present the latest tea research and marketability. Participants will be invited to examine the 18 distinct cultivars planted in the field, and tea plants will be for sale for $25 each from the greenhouse.
After the tasting, Tea Day participants will be invited to provide feedback on the top three varieties they recommend that Kearney REC team prioritizes for growing in California.
Register for the free event at https://surveys.ucanr.edu/survey.cfm?surveynumber=48675. UC Kearney Agricultural Research and Extension Center is located at 9240 S Riverbend Ave in Parlier.
Tea Day Schedule:
8 a.m. – On-site registration
8:15-8:45 a.m. – Refreshments and networking
8:45 a.m. – Welcome by Atef Swelam, director of UC Kearney Agricultural Research and Extension Center
9-10 a.m. – Presentations:
- UC Davis professor Jacquelyn Gervay Hague – “Innovation Takes Root: Establishing Tea Production in California”
- Alex Ng, Taiwan tea scientist visiting UC Davis – “From Leaf to Legacy: Tea Appreciation and Cultural Foundations for California Farmers”
- Katharine Burnett, founder of the Global Tea Institute at UC Davis – “Role of the Global Tea Institute for the Study of Tea Culture and Science”
10-11 a.m. – Participants will be able to visit the tea field and greenhouse. Tea plants will be available for sale.
11 a.m.-Noon – Tea sensory experience
California
Fuel, energy prices raise the pressure as California officials take next steps on climate
As California regulators prepare for a massive update of the state’s signature climate program, they face mounting pushback from lawmakers and oil industry groups who warn it could drive up already-high energy costs.
Lawmakers voted last year to reauthorize the cap-and-invest program — formerly known as cap-and-trade — through 2045. The program progressively lowers the amount of greenhouse gas emissions allowed in the state, and lets emitters buy and sell unused pollution credits, or allowances. It is key to California’s climate strategy and generates billions in revenue for the state each year.
Although the program was always designed to ratchet down on emitters, some legislators who supported the extension say the draft unveiled by the California Air Resources Board could hit consumers and the energy sector hard at the wrong time.
Among the proposed updates, the plan would tighten the cap on carbon dioxide emissions by 118 million tons by 2030. It would also adjust the state’s system of free allowances, which have historically been given to oil refineries and other industrial facilities in the hope of keeping them in California. It would shift more of those free allowances from natural gas utilities to electric utilities.
A wave of public comments from lawmakers, oil companies, environmental advocates and consumers flooded the state Air Resources Board in advance of this week’s deadline, and the agency will have until May to revise the plan and put it to a final vote.
Among the most notable critics are Democratic lawmakers who voted to extend the program last year. Some are concerned the plan would raise costs for refineries, driving more of them out of California and leaving the state more dependent on imported refined fuels. Others are worried the plan doesn’t do enough to address high electricity costs.
In a letter to the state Air Resources Board, a coalition of 15 Democratic Assembly members, including Majority Leader Cecilia Aguiar-Curry (D-Winters), warned that the plan moves too fast for emitters to keep up, which they said will destabilize California’s complex network of fuel, gas and energy resources and push more refiners to leave the state. Phillips 66 and Valero have already announced plans to shutter major refineries in Los Angeles and Benicia.
“This proposed regulatory update would further burden an already struggling energy market across multiple sectors and compound stress on the very infrastructure that has punished California consumers with the highest energy prices in the nation,” the lawmakers wrote.
Oil industry groups raised similar concerns. The Western States Petroleum Assn. which represents refiners, warned that their costs could rise $1.5 billion annually by 2035.
Chevron executive Andy Walz said the added costs could translate to roughly $1.70 more per gallon of gasoline by that year.
“Affordability is a top concern for California residents and Chevron, and these proposed amendments would only exacerbate the high cost of living in the state,” Walz said.
But how much regulations contribute to gasoline costs in California is disputed. Officials with the state Air Resources Board said the proposal largely maintains the status quo for refineries. It includes “flexibilities that support doing business in California and help ensure liquid fuel supply remains reliable, affordable, and resilient throughout the transition to carbon neutrality,” spokeswoman Lindsay Buckley said in an email.
The updated program would also deliver $180.7 billion in statewide benefits, including $123 billion in avoided health costs thanks to cleaner air, and up to $485 billion in global savings due to avoided climate damage, Buckley said.
“The cap-and-invest program is the most cost-effective way for California to achieve its statutorily mandated climate goals,” she said.
At the same time, some lawmakers and advocates say the proposal disproportionately burdens the electricity sector at a moment when utility bills are soaring.
Assemblywoman Jacqui Irwin (D-Thousand Oaks), who wrote legislation extending the program last year, led a separate letter from more than two dozen Democratic lawmakers urging the air officials to speed up free allowances for electric utility companies in order to “meaningfully address electricity affordability in the near-term.”
They were also concerned the plan would result in lower climate credits for consumers — twice-yearly rebates that appear directly on people’s electric bills.
Policy analysts agreed the current plan burdens electric utilities, which could translate into higher bills.
Still, the proposal is a “strong starting point” that can be fine-tuned to better balance emissions cuts with affordability, said Clayton Munnings, executive director of Clean and Prosperous California, an environmental economics nonprofit focused on the cap-and-invest program.
The California Air Resources Board “had a very strong first start, but I think there’s a clear pattern in stakeholder feedback,” he said. “The intent here was to lower utility bills, and we should make good on that promise.”
On the fuel side, Munnings said the program was designed with refineries in mind, and regulators still have plenty of tools to address their concerns if needed. What’s more, he said the carbon market largely shrugged at the proposed removal of 118 million credits, and the cost of releasing one ton of carbon pollution went down — indicating that even tighter reductions could be warranted.
Indeed, an analysis by the nonprofit Environmental Defense Fund and the modeling firm Greenline Insights found that the state Air Resources Board could remove as many as 180 million allowances from the market and still preserve household affordability benefits.
Ensuring the program delivers on its promised emission cuts is crucial, said the Environmental Defense Fund’s California state director Katelyn Roedner Sutter. The state is not on track to meet its targets, including a 40% reduction in greenhouse gas emissions by 2030 and at least 85% by 2045.
“Cap-and-invest is so important because it helps reduce emissions, it generates desperately needed revenue, and it is the most cost-effective approach to reducing greenhouse gas pollution that we have,” she said.
The debate is unfolding as global oil prices soar amid the U.S.-Israeli war on Iran, which has disrupted shipping and production in the Middle East. Crude prices briefly surged beyond $119 a barrel this week.
National gasoline prices averaged $3.60 a gallon Thursday, according to AAA, up from $2.94 one month ago. In California, gas averaged $5.37 a gallon, up from $4.55 a month ago.
But according to the California Energy Commission, only about 6% of the price of retail gasoline in the state is attributable to the cap-and-invest program, while nearly 37% comes from the cost of crude oil.
That’s precisely why the state should stay the course, Roedner Sutter said.
“The best thing California can do is lean on its cost-effective climate policy, which is cap-and-invest, and continue moving the state away from dependence on fossil fuels,” she said. “In the long run, that is what is going to protect Californians most — not being dependent on this volatile industry.”
The state Air Resources Board is expected to revise the proposal in the coming weeks before bringing it to a vote in May.
California
Tom Steyer Lays Out Vision for a More Affordable California in Run for Governor | KQED
Billionaire climate activist Tom Steyer has vastly outspent his competitors in the California governor’s race. The former hedge fund manager, who previously ran an unsuccessful bid for president in 2020, now promises that if elected governor, he will lower costs by requiring corporations pay what he calls their “fair share.”
In conversation with Marisa and Scott, Steyer reflects on growing up in New York City and how he went from building his fortune at Farallon Capitol to fighting climate change. The discussion also covers his policy agenda, including plans to reduce electricity bills by breaking up utility monopolies and boosting funding for public schools.
This interview is part of a series of conversations with the 2026 gubernatorial candidates for California. The primary election is June 2.
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