California lawmakers scrutinize oil imports and refinery regulations amid rising gas prices

California's Assembly Utilities and Energy Committee convened on May 28, 2025, to address pressing issues surrounding the state's oil supply and pricing dynamics. A significant focus of the meeting was the impact of global trends on local refineries and the implications for California's energy policy.

Committee members discussed the recent trend of larger, more efficient refineries opening worldwide, which has led to the closure of smaller, less efficient facilities, including a major refinery in Texas. This shift is creating pressure on California's refining capacity, which is already strained by regulatory challenges and a lack of new drilling permits. In 2019, California issued 2,366 new drilling permits, but that number has drastically decreased to just 30 in 2024, raising concerns about the state's ability to meet its oil demand.

The committee highlighted that California imports approximately 75% of its oil, which significantly contributes to higher gas prices compared to other states. The cost of acquiring foreign crude oil is about $0.15 more than domestic sources, and the reliance on imports is seen as a key factor driving up fuel costs. Members emphasized the need for increased drilling permits to boost local supply and potentially lower prices for consumers.

Additionally, discussions touched on the complexities of oil pricing, including the role of importers and brokers in price manipulation. The committee acknowledged that California's spot market lacks sufficient trading liquidity, making it vulnerable to fluctuations and manipulation. To combat this, there is a push for a more active trading market to enhance competition and stabilize prices.

Environmental concerns were also raised, particularly regarding the sourcing of imported oil from regions like the Amazon rainforest, which has significant ecological impacts. Committee members underscored the importance of balancing energy needs with environmental responsibility, advocating for cleaner energy sources and stringent environmental standards for both local production and imports.

As California navigates these challenges, the committee's discussions signal a critical juncture for the state's energy policy, with potential implications for both consumers and the environment. The focus on increasing local production and addressing market dynamics will be essential as California seeks to secure a stable and sustainable energy future.