Even Democrats Are Warning CARB: Cap-and-Invest Changes Could Make California’s Fuel Crisis Worse

California’s increasingly aggressive Cap-and-Invest agenda is no longer drawing concern only from refiners and consumer advocates. According to a new Union Tribune report, proposed changes now under consideration by the California Air Resources Board are alarming oil refiners, triggering warnings about even higher gasoline prices, and prompting pushback from a bloc of Democratic lawmakers who say the state’s fuel supply and working families are at risk.

That is not a small development.

For years, Sacramento has insisted that every new climate regulation could be absorbed without serious disruption to affordability, fuel reliability, or the basic economics of keeping refineries open in California. But that story is getting harder to sell. The proposed CARB changes would tighten the Cap-and-Invest program by removing 118.3 million metric tons of carbon allowances between 2027 and 2030. Industry estimates cited in the article warn that compliance costs for refiners could rise from roughly $357 million in 2026 to as much as $1.5 billion annually by 2035. At a time when Californians already pay some of the highest gasoline prices in the nation, that is not regulatory housekeeping. That is a flashing red warning light.

Even under the current program, the article notes that Cap-and-Invest already adds about 24 cents to the cost of a gallon of gasoline, on top of California’s other taxes and fees. CARB says the program has generated $34 billion for climate-related investments over the years, but motorists do not fill up their tanks with press releases, and families do not balance household budgets with slogans. They pay cash and, increasingly, they pay more.

Refiners are warning that the proposed rule changes could accelerate the loss of in-state refining capacity, a threat California can least afford. Phillips 66 has already completed the shutdown of its Los Angeles-area refinery, and Valero is expected to close its Benicia refinery by the end of April. Together, those facilities account for about 18 percent of California’s refining capacity for gasoline, diesel, aviation fuel, and other transportation fuels. Once that capacity disappears, it does not magically reappear because a regulator says the transition will be smooth. In fact, even California Energy Commission Vice Chair Siva Gunda acknowledged that as refining capacity declines, “this is not going to be a smooth transition.”

That reality is beginning to penetrate even the Democratic supermajority. The article reports that fifteen Assembly Democrats sent a March 9 letter to CARB warning that the proposed update could further destabilize California’s fuel supply, economy, and working families. Their letter reportedly states that California’s regulatory environment has already driven out market participants necessary for an affordable energy consumer market and that the consequences are now being borne by consumers who are least able to afford them. That is a remarkable admission, and a telling one. When even members of the majority party start sounding like they have discovered gravity, it usually means the ground is moving beneath them.

The contradiction at the center of California’s energy policy is getting harder to ignore. The state claims to want affordability, reliability, lower emissions, and energy security all at once, while continuing to attack the very in-state refining and production base that makes those goals possible. The Union Tribune piece notes that 63.5 percent of oil processed in California refineries in 2024 came from foreign sources. So, as Sacramento heaps new costs and uncertainty on local refiners, it is effectively pushing the state toward greater dependence on imported crude and imported fuels, often from jurisdictions with weaker environmental standards and longer supply chains. That is not climate leadership. That is emissions outsourcing dressed up in virtue language.

Environmental groups, predictably, are demanding even tougher rules. But Californians are starting to see the practical result of this ideology-first policymaking: fewer refineries, greater dependence on imports, more exposure to global instability, and higher prices at the pump. The article notes that California gas prices have already surged in recent weeks, with San Diego regular averaging $5.94 per gallon on Sunday, compared to a national average of $3.94. That kind of spread is the product of deliberate policy choices.

CIPA supports responsible environmental stewardship and realistic pathways to lower emissions. But California cannot continue pretending that every new regulatory burden is costless, consequence-free, or somehow disconnected from refinery closures, fuel imports, and pain at the pump. At some point, even Sacramento has to choose between fantasy and arithmetic. CARB is expected to bring its proposal forward for a public hearing at the end of May. Californians deserve a serious debate before more bad policy becomes permanent damage.