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Policy Choices Drive California’s Dependence on Foreign Oil

According to new Energy Commission data, California met only 23.4% of its oil needs through in-state production this past year, the lowest in over 40 years. This decline has increased the state’s reliance on foreign oil to over 76%, mainly from Iraq, Saudi Arabia, and Brazil.

This drop in domestic oil production is a result of policy decisions, not decreasing demand. The state government has put 1,400 applications for increasing in-state oil production on hold. In 2023, only 24 oil permits were issued, compared to 2,000 in 2020 -- a 99% drop.

Since January 2019, in-state oil production has decreased by 33%. Yet, Californians are paying $26.6 billion a year to import oil that could be produced locally. Post-pandemic, California's oil demand has increased, leading to higher costs as the state spent $26.6 billion in 2023 on imported oil at an average of $83 per barrel.

It doesn’t take an economist to predict this outcome. Reducing in-state production while demand is climbing only shifts the source to foreign suppliers.


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