Looking Abroad for Oil While Restricting Production at Home

A new Reuters report highlights the importance of additional supply to energy markets. Oil prices declined as trading began this week after President Donald Trump waived sanctions and tariffs on Russia, potentially opening the door to additional Russian fuel exports. For California’s independent producers, the development raises a straightforward question: Why continue restricting production here while looking overseas to meet energy needs?

California producers would like to produce substantially more domestic crude to supply the state’s refineries and meet Californians’ continuing demand for petroleum products. Yet laws signed by Governor Gavin Newsom have placed significant obstacles between those producers and the investment needed to sustain and expand production. CIPA’s concern is that California is choosing greater dependence on outside suppliers while constraining businesses prepared to produce more oil at home.

Those barriers take several forms. SB 1137 generally prohibits approval of new wells and rework permits within 3,200 feet of homes, schools, and other sensitive locations, restricting both new development and work needed to sustain existing production. AB 1167 imposes full-cost bonding requirements on acquisitions of covered wells and facilities, creating a substantial financial barrier to transactions that could bring new investment and experienced operators to existing properties. AB 3233 expressly authorizes cities and counties to impose additional restrictions, including prohibitions on oil and gas operations. Together, these measures constrain where producers can operate, how properties can change hands and whether additional investment can move forward.

These policies do not eliminate California’s need for petroleum. CIPA’s position is that restricting local production while demand continues shifts supply opportunities, jobs, and investment elsewhere, while leaving California more exposed to international market disruptions and decisions made by foreign governments.

The administration has already acknowledged the need to stabilize domestic supply through SB 237, which declared Kern County’s environmental impact report sufficient for specified oil and gas permitting under the California Environmental Quality Act. That was a meaningful step, but it did not remove the broader restrictions imposed by SB 1137, AB 1167, and AB 3233. A workable permitting pathway in Kern County cannot, by itself, resolve the full range of obstacles facing California producers.

Additional California crude production must also be paired with sufficient refining capacity to turn that oil into the gasoline, diesel, and other products consumers use. CIPA supports a coherent policy that allows responsible production, maintains essential infrastructure, and provides the certainty needed for long-term investment.

The lesson from the Reuters report is clear: Supply matters. California cannot control Russian exports or international diplomacy, but it can change the policies that prevent its own producers from supplying more of the oil the state still needs. California’s independent producers are ready to contribute more. Sacramento should allow them to do so.