California Policies Promote Foreign Oil

California has become heavily reliant on foreign oil, not because our overall use of petroleum disappeared, but because state policy made producing and processing local crude progressively harder and more expensive. The data tell the story: in 1985, 61.8% of the crude run in California refineries was produced in‑state and just 5.5% came from foreign sources. By 2025, in‑state production supplied only 22.9% of refinery feedstock, while foreign oil had jumped to 61.1% of the barrels processed in California refineries.

Consumers did not ask for this. Rather, over several decades, Sacramento layered climate and anti‑fossil‑fuel measures on top of traditional environmental regulation, then added extraction‑specific rules—offshore leasing bans, a phase‑out of fracking, and an announced end‑date for in‑state extraction. These policies were explicitly designed to constrain and ultimately stop local crude production, raising regulatory risk and compliance costs for California producers and discouraging reinvestment in fields and refineries. As local supply fell, refineries increasingly turned to tankers bringing in foreign crude to keep meeting demand.

As a result, California’s energy security has been weakened, and the state is increasingly exposed to disruptions and price shocks driven by global turmoil.

CARB Approves Climate Disclosure Regulations

California’s climate agenda continues to steam ahead, in particular SB 253, SB 261, and the new CARB climate‑transparency rules.

On February 26, 2026, CARB approved regulations to implement the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). SB 253  requires U.S.-based entities doing business in California with over $1 billion in annual revenue to report Scope 1 and Scope 2 GHG emissions annually, starting with a deadline of August 10, 2026. Companies must begin reporting indirect Scope 3 emissions (supply chain, employee commuting, etc.) in 2027. SB 261 requires U.S.-based entities with over $500 million in annual revenue to prepare a biennial report on climate-related financial risks and mitigation strategies. The regulations will impact thousands of public and private companies who do business in California. They will be facing hundreds of thousands of dollars per reporting cycle (consultants, auditors, data systems) to comply.

These laws don’t just hit “big corporations.” They force large companies doing business in California to build costly, complex reporting systems and then push those demands down their supply chains—onto local manufacturers, farms, logistics firms, and service providers who lack in‑house ESG teams and spare capital. Compliance dollars that could fund jobs, wage growth, and investment instead get redirected to consultants, auditors, and legal defense. Over time, firms rationally respond by limiting their California footprint, shifting purchasing out of state, or shelving new projects here.

Scope 3 reporting is particularly troubling. Scope 3 has nothing to do with the emissions produced by a company. Instead, it refers to emissions attributable to suppliers, customers, and other third parties. This will force large companies to push data‑collection and verification demands down onto suppliers, including local small and medium‑sized businesses, increasing their operating costs. California’s agriculture industry will be particularly affected by the reporting requirements.

Even if you support ambitious climate goals, it should concern you that the marginal “win” from yet another layer of reporting is speculative, while the costs to competitiveness and opportunity in California are very real.

DOE Invokes Defense Production Act to Restart California Offshore Oil Pipeline

The Department of Energy has just issued a major order under the Defense Production Act directing Sable Offshore Corp. to prioritize use of its Santa Ynez Pipeline System to move offshore California crude to in‑state refineries, citing the ongoing national energy emergency and particular vulnerabilities on the West Coast. This order effectively instructs Sable to treat pipeline transportation from the Santa Ynez Unit as a top‑priority service, ahead of alternative transportation options, and to report monthly to DOE on volumes moved under the order. It underscores how federal emergency authorities are now being used to compel operational changes in critical energy infrastructure.

In tandem, a new executive order titled “Adjusting Certain Delegations Under the Defense Production Act” amends prior delegations so that both the Secretary of Commerce and the Secretary of Energy can independently exercise key Defense Production Act authorities. It also clarifies that agency heads do not need to go back to the President for recommendations when they already hold delegated authority under Executive Order 13603 or other presidential delegations, streamlining the path for agencies—especially DOE—to act quickly in response to energy emergencies. This is a notable procedural shift for easing the use of DPA tools in the energy sector.

Taken together, these actions signal a more assertive federal posture on domestic energy security, particularly in states where state and local permitting or policy choices are perceived as constraining critical infrastructure. For energy, infrastructure, and environmental stakeholders, they raise important questions about the balance between federal emergency powers and state regulatory regimes, and about how often we may see DPA authorities invoked to prioritize energy production and transportation going forward.

 

 

Valero’s Benicia Refinery Closure

Valero’s 170,000 barrel-per-day Benicia refinery, representing ~10% of California’s gasoline, will phase out production by April 2026, creating severe local job insecurity for 400+ workers and threatening $11 million annual tax revenue for the City of Benicia. The closure stems from high regulatory costs, impacting California’s fuel supply and raising potential price volatility.

The closure adds further risk to California’s beleaguered fuel supply chain. The shutdown is expected to reduce in-state production, potentially increasing prices at the pump. The closure will increase California’s reliance on imported gasoline and diesel, and it may heighten vulnerability to supply disruptions or refinery outages elsewhere on the West Coast.

Local workers are facing a harsh reality of immediate job losses and financial insecurity. Refinery jobs are generally high‑wage, unionized, blue‑collar positions, with workers receiving approximately $100,000 per year with overtime and benefits. The promised “just transition” for these families and communities has not materialized.

For Benicia’s residents, and all Californians, there are significant questions regarding affordability and energy security that need answers from state policy makers.

SoCalGas Issues, Then Lifts “Advisory”

Southern California Gas Co. on Dec. 18 issued a “SoCalGas Advisory,” asking customers to reduce use of natural gas to lower the risk of gas and electricity shortages during a cold snap. It lifted the advisory two days later.

“Working with our customers and suppliers, we were able to manage our system to deliver reliable heating and electricity to our region during this recent cold snap,” said a SoCalGas spokesperson.

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California Sides With BLM on Flaring Rule

California and New Mexico have asked a federal court to allow them to join a lawsuit over a final rule issued by the Interior Department that reduces venting and flaring from oil and gas operations on public and tribal lands.

The states support the position of the Department’s Bureau of Land Management, putting them in opposition to the stance taken by Montana, North Dakota and Wyoming, which in November filed the lawsuit opposing the rule in the U.S. District Court in Wyoming and seeking an injunction against its implementation by the BLM.

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