Sacramento Takes Another Step Backward on California Energy Policy

California's independent oil producers suffered another setback during last Thursday's Senate Appropriations Committee Suspense Hearing when AB 2711 (Ellis) was held in committee, effectively ending the bill for the year.

AB 2711 was one of CIPA's priority measures, because it offered something California's oil and gas regulatory system desperately needs: greater certainty and accountability in the permitting process. The bill sought reasonable timelines for CalGEM to determine whether a Notice of Intention is complete and to act on permit applications. Instead of providing producers with that modest measure of regulatory relief, the Legislature stopped the bill at the fiscal committee.

The outcome is particularly frustrating when viewed alongside what happened to a package of bills affecting California's already-fragile refining sector.

CIPA joined with the Western States Petroleum Association in opposing five refinery measures identified by WSPA as creating additional costs, regulatory uncertainty, and investment risk. Of those five bills, four survived the legislative process while only SB 1245 (Stern) failed to advance. The Legislature therefore blocked a bill intended to provide regulatory certainty for California producers while advancing most of a package that threatens to create additional uncertainty for the refineries those producers depend upon.

That is precisely backwards.

The five refinery bills identified in WSPA's analysis are SB 1259 (Blakespear), SB 966 (Gonzalez), AB 605 (Muratsuchi), SB 1245 (Stern), and SB 493 (Becker). WSPA's central warning is straightforward: more regulation means more costs and uncertainty, less investment, greater risk of refinery closures, greater dependence on imported fuel and ultimately less energy security.

SB 1259 imposes new refinery decommissioning and remediation requirements, including disclosures involving closure costs and financial obligations. WSPA argues that requiring such information when a refinery has no planned retirement date can send misleading signals to investors and create additional financial and regulatory uncertainty at precisely the moment California says it wants refiners to continue investing here.

SB 966 changes California's refinery process safety management framework and, according to WSPA, attempts to undo a settlement reached between the industry and the state following litigation and extensive negotiations. California already maintains extensive refinery process-safety requirements. Rewriting those rules again creates exactly the kind of regulatory whiplash that makes long-term capital investment more difficult.

AB 605 creates additional requirements surrounding refinery end-of-life staffing and establishes a new task force addressing refinery safety and related issues. WSPA argues that the measure risks creating a duplicative and potentially conflicting regulatory structure while forcing refiners to contemplate closure-related requirements when California's stated policy objective should be keeping its remaining refineries operating.

SB 493 extends California's price-gouging framework during sustained U.S. military operations abroad. The proposal is especially troubling because California has already wrestled with refinery-margin controls. The California Energy Commission previously determined that implementing the maximum gross gasoline refining margin and penalty could negatively affect fuel supply and consumer costs and deprioritized the policy in favor of broader supply-stabilization efforts. WSPA argues that reviving a similar concept under another mechanism risks making California less attractive to the imported fuel cargoes upon which the state has become increasingly dependent.

The one bright spot was SB 1245 (Stern), which did not advance. The bill would have created additional uncertainty surrounding California's gasoline specifications after refiners invested billions of dollars in facilities specifically designed to produce California's unique cleaner-burning fuel. WSPA warned that changing those specifications after those investments were made could alter the competitive landscape in favor of imported fuel rather than making California refining more competitive.

The broader policy contradiction is difficult to ignore.

California officials acknowledge that the state's fuel market is unusually isolated. The California Energy Commission notes that gasoline consumed here must generally either be refined within California or transported here by marine vessel because there are no pipelines bringing finished transportation fuels into the state.

At the same time, California motorists have recently endured gasoline prices well above $5 per gallon. The U.S. Energy Information Administration reported California regular gasoline at roughly $5.20 per gallon in mid-July, after prices approached $5.70 in June.

And demand has not disappeared. WSPA's analysis, using California Department of Tax and Fee Administration data, notes that net on-road gasoline sales declined from approximately 15.56 billion gallons in 2017 to 13.30 billion gallons in 2025, an average decline of only about 1.6 percent annually. More than 90 percent of vehicles on California roads still rely on petroleum fuels, while jet fuel demand remains strong.

This matters directly to CIPA members because independent producers and California refiners are economically connected.

Our members need refineries, and refineries need a regulatory environment in which companies are willing to continue investing and operating. California crude has to go somewhere. Every refinery closure reduces the market available for barrels produced by California workers from California oil fields. As refining capacity contracts, transportation becomes more difficult, producers lose market options and the state becomes increasingly dependent upon crude oil and finished fuels arriving from elsewhere.

The state's own experience should be sending lawmakers in the opposite direction. California needs more domestic production, more pipeline capacity, more refining stability and more investment certainty. Instead, during the same Suspense Hearing in which CIPA's AB 2711 was stopped, four of the five refinery measures CIPA and WSPA opposed were allowed to continue.

WSPA's factsheet summarizes the consequence particularly well: every gallon California refineries do not produce must ultimately be replaced by fuel produced somewhere else, under another jurisdiction's environmental standards, labor standards and tax structure.

That is not an energy strategy. It is outsourcing.

CIPA will continue advocating for policies that keep California's independent producers operating and preserve the infrastructure necessary to move our crude to market. That includes standing with the state's refining sector when legislation threatens the viability of the facilities that purchase and process California-produced crude.

California policymakers frequently speak about affordability, energy security and stabilizing gasoline prices. Those goals cannot be reconciled with continually increasing the cost and uncertainty associated with producing and refining fuel inside California.

The message from CIPA remains simple: Do no more harm.

Unfortunately, Thursday's Suspense Hearing moved California another step in the wrong direction.