Energy Contradiction: Blocking California Oil While Importing More from Everywhere Else

California policymakers often claim they are reducing emissions by making it increasingly difficult to produce oil within the state. The reality tells a very different story.

As Sacramento continues to restrict in-state oil production through permitting delays, escalating regulatory costs, and policies designed to phase out the industry, California's demand for petroleum has not disappeared. Instead, that demand is increasingly being met by tankers from thousands of miles away.

That is not climate policy. It is emissions outsourcing.

A new interactive analysis published by the Cato Institute illustrates just how significant domestic shipping demand becomes when transportation barriers are temporarily removed. Following a broad federal waiver of the century-old Jones Act, millions of barrels of crude oil and refined products began moving between American ports using foreign-flagged vessels, revealing a level of domestic energy commerce that had previously been uneconomic or impossible under existing shipping restrictions.

For California, the implications are impossible to ignore.

The Cato data show California has become the largest recipient of shipments under the waiver, receiving dozens of cargoes of crude oil, gasoline, jet fuel and other petroleum products from elsewhere in the United States. During the waiver period, more than 10 million barrels of petroleum products reached the West Coast, representing an 83 percent increase over historical domestic shipping volumes. California alone accounted for 36 incoming cargoes from other states.

At first glance, that may appear to be good news. But it also exposes one of the greatest contradictions in California energy policy.

California is deliberately making it harder for its own independent producers to develop oil located only a few hundred miles from California refineries while simultaneously increasing dependence on oil transported thousands of miles across oceans and through the Panama Canal.

Every additional mile traveled means additional fuel consumed. Every additional tanker voyage means additional greenhouse gas emissions. Every additional transfer between vessels creates additional logistical complexity and environmental risk.

California's climate policies measure emissions generated inside state boundaries while largely ignoring emissions associated with importing the products Californians continue to consume. The atmosphere, however, does not recognize state lines.

If California replaces locally produced crude from Kern County with oil and refined fuels from Texas, Alaska, Guyana, Iraq, Ecuador or the Middle East, the carbon associated with transporting that oil does not simply disappear. In many cases, total lifecycle emissions increase because of the enormous transportation distances involved.

Recent emergency shipments underscore this reality. During supply disruptions earlier this year, crude oil was transported from the Strategic Petroleum Reserve in Louisiana through the Panama Canal before ultimately supplying California refineries.  That’s an extraordinary logistical effort made necessary by tightening supplies on the West Coast.

Meanwhile, California's independent producers continue operating under some of the world's highest environmental, labor, and safety standards.

Unlike many foreign producers, California operators are subject to comprehensive methane regulations, rigorous air quality requirements, groundwater protections, extensive well integrity standards, and continuous regulatory oversight.

In other words, California is increasingly replacing some of the world's most highly regulated production with oil produced under environmental standards that are often substantially less stringent.

That is neither an environmental victory nor an economic one. It is simply exporting jobs, tax revenue, and energy production while importing the same product from farther away.

This reality also reinforces why legislation such as AB 2716 matters.

Every unnecessary regulatory obstacle that prevents financially capable operators from acquiring mature California oil fields accelerates production declines and increases California's dependence on imported crude. When wells become stranded because ownership transfers cannot occur efficiently, production falls. That’s not because consumers need less energy, but because government policy makes continued operation increasingly difficult.

The result is predictable:

• California produces less.

• California imports more.

• Transportation emissions increase.

• Local jobs disappear.

• Property tax revenues decline.

• Consumers continue using essentially the same amount of petroleum.

California's energy demand has not vanished. Only the location of production has changed.

If policymakers are genuinely concerned about reducing global greenhouse gas emissions, strengthening energy security, and supporting local economies, the solution is not forcing production overseas or across the continent.

The solution is producing more of the energy Californians already consume, here at home, under California's stringent environmental standards, close to the refineries that process it.

That is good economics.

That is good environmental policy.

And that is simply common sense.