California Lawmakers Approve Package Balancing Oil Production wiht Climate Goals

California lawmakers recently passed a series of measures addressing the state’s energy future, including provisions to expand oil production alongside extensions of key climate initiatives. The legislation comes as the state faces refinery closures and declining crude oil output.

A key component of the package, approved Saturday, grants statutory approval for up to 2,000 new oil wells annually in Kern County – which currently produces approximately three-fourths of California’s crude oil – through 2036. This aims to circumvent a decade of legal challenges from environmental groups attempting to halt drilling in the region. Assemblymember Lori D. Wilson (D-suisun City), co-author of SB 237, highlighted the potential economic benefits, stating the closure of valero’s Benicia refinery is projected to result in $1.6 billion in lost wages and negatively impact local government budgets. she believes increased domestic oil production will “stabilize the market” and “create and save jobs.”

However, the move has drawn criticism from environmental advocates and some progressive Democrats. Assemblymember Alex Lee (D-San José), chair of the Legislative Progressive Caucus, labeled the bill a “regulatory giveaway to Big Oil,” arguing it won’t meaningfully address gas prices or the struggles of refineries facing declining oil demand. Data indicates California’s crude oil production is decreasing at an annualized rate of 15%, outpacing even the state’s most pessimistic forecasts for gasoline demand reduction.

The package isn’t solely focused on fossil fuels. It also includes a 15-year extension, through 2045, of California’s “cap and invest” program (formerly cap-and-trade). This program sets limits on greenhouse gas emissions, allowing companies to trade emission allowances, and generates revenue for climate initiatives like high-speed rail and safe drinking water projects. The program is considered vital for California to achieve carbon neutrality by 2045.

Further,the legislation addresses energy infrastructure. AB 825 seeks to enable California’s participation in a regional electricity market, potentially allowing the state to buy and sell clean power with othre Western states to improve grid reliability and lower costs. Concerns have been raised by opponents who fear a loss of control over the state’s power grid.

the package includes a provision allowing the governor to temporarily suspend the state’s summer-blend gasoline fuel standards – which reduce emissions but increase fuel costs – if prices remain elevated for over 30 days or are projected to rise.

State Senator Shannon Grove (R-Bakersfield) emphasized Kern County’s energy production capabilities, noting it currently produces 80% of California’s oil, 70% of its wind and solar power, and over 80% of in-state battery storage capacity.