The Golden State’s Fading Oil Legacy California, once a powerhouse in U.S. oil production, is watching its storied industry fade into history. From a peak of 760,000 barrels per day (b/d) in 2000, output has plummeted to just 250,000 b/d in 2025.
This decline isn’t just a matter of exhausted wells; it’s the result of deliberate policy choices aimed at achieving net-zero emissions. Governor Gavin Newsom has been at the forefront of this shift, implementing aggressive regulations that critics argue amount to a “war on oil and gas.” But as refineries shutter and production wanes, the ripple effects could extend far beyond California’s borders—potentially derailing Alaska’s nascent oil rebound.
We have an interview with Katy Grimes, Editor-in-Chief of the California Globe, and Mike Umbro live on LinkedIn, YouTube, and X on Friday at 11:00 Pacific and 1:00 Central. YouTube:
Has California’s Oil and Gas Industry Hit the Point of No Return? – California Globe
Historically, California’s oil rush began in the late 19th century, fueling the state’s economic boom. Fields like Kern County’s Elk Hills, Midway-Sunset, and Kern River still account for 70% of current output, with the Los Angeles Basin contributing 10% and offshore Santa Barbara adding 5%.
Yet, aging reservoirs producing heavy crude (12–14 degrees API) face natural decline, compounded by regulatory hurdles. A 1994 moratorium on new leasing in state waters, combined with federal offshore restrictions, has stifled exploration. Refineries have dwindled from 20 in 2010 to 12 today, with capacity dropping from 1.9 million b/d in 2000 to 1.5 million b/d.
Recent closures, such as Phillips 66’s Los Angeles facility (140,000 b/d) in October 2025 and Valero’s Benicia plant (145,000 b/d) slated for April 2026, will strip away another 285,000 b/d.
Newsom’s Net-Zero Crusade: A Step Too Far?
Governor Newsom’s policies have accelerated this downturn, positioning California as a leader in the fight against climate change—but at what cost? His administration’s commitment to ending oil extraction by 2045, as outlined in the California Air Resources Board (CARB) Scoping Plan, includes halting new fracking permits and enforcing a cap-and-trade system that covers 80–85% of industrial and energy sectors.
Carbon prices have ranged from $12–$38 per ton, generating over $25 billion for clean-energy initiatives.
Stricter gasoline standards (CARBOB) and local bans, like those in Santa Barbara County, have further squeezed the industry.Stories from Energy News Beat highlight the backlash. In October 2025, Newsom signed SB 237, granting Kern County authority for up to 2,000 new oil wells in a surprising reversal, amid questions of whether his anti-oil stance has gone too far—especially as he eyes a potential presidential run.
Critics point to his lawsuits against oil companies, permit moratoriums, and emissions crackdowns that have driven majors out of the state.
One piece lambasts Newsom’s energy hypocrisy, noting California’s push for a carbon-neutral grid by 2045 while importing crude from ecologically sensitive areas like the Amazon.
Another details how his policies chased out companies, with Valero’s refinery shutdown accelerating the exodus and potentially spiking gas prices to $8 per gallon.
Even as Newsom recently asked regulators to keep refineries profitable to avert shortages, many see it as “too little, too late.”
These measures have forced California to rely heavily on imports to meet its 1.4–1.6 million b/d consumption—5–6 times its domestic production.
Suppliers include Ecuador and Brazil (170,000 b/d each), Canada (100,000 b/d via the Trans Mountain Expansion), and crucially, Alaska’s North Slope (ANS) at 220,000 b/d—nearly all of which heads to California.
But with refining capacity shrinking and extraction phasing out, this dependency is precarious.
Alaska’s Arctic Reopening: A Timely Boost or False Hope?
Meanwhile, Alaska is poised for an oil resurgence. In a recent move, Congress used the Congressional Review Act to overturn a Biden-era rule, reopening more of the Arctic National Wildlife Refuge (ANWR) Coastal Plain to leasing.
The Senate passed the resolution 49-45, reverting to the 2020 Trump-era framework that exposes nearly the entire 1.56-million-acre area—geologically akin to prolific North Slope fields like Prudhoe Bay.
This reverses Biden’s restrictions, reducing regulatory uncertainty for long-term projects. Historically, the Coastal Plain has been a battleground, with decades of litigation swinging between openings and closures.
While no immediate drilling is expected due to high costs, long lead times, and crude prices at $60–$70 per barrel, it offers more options for bidders.
Companies like ConocoPhillips and Santos are focusing on faster-payback ventures like the Willow project (180,000 b/d by 2029) and Pikka (80,000 b/d by 2026).
Yet, Alaska’s rebound hinges on markets. In the 1980s and 1990s, Alaska supplied nearly all crude to California and the Pacific Northwest via the Trans Alaska Pipeline.
Today, California’s imports are vital, but declining production and commitments limit Alaska’s ability to ramp up without a reliable buyer.
The Domino Effect: Impacts on Investors and Consumers
If California’s demand for Alaskan oil falters—due to refinery closures and net-zero transitions— the consequences could be profound. Alaska’s ANS exports face an “uncertain future,” potentially forcing shipments to Asia amid higher transport costs and geopolitical risks.
For Alaskan investors, this means stalled projects: exploration halts create a “cascade effect,” freezing multi-year investments and thousands of jobs.
Reduced demand could lower revenues, making high-cost Arctic developments uneconomical and deterring capital inflows.In California, consumers already pay a premium—$4.57 per gallon on average—with further spikes likely from distant imports replacing Alaskan crude.
Gasoline consumption has declined since peaking 20 years ago, driven by efficient vehicles and EV mandates, but supply deficits could exacerbate prices.
Regulations like SB X1-2 may discourage investment, leading to chronic shortages and unprecedented CARBOB prices.
Families, truckers, and airlines brace for hikes, with diesel and jet fuel costs soaring.
For California investors, the oil sector faces extinction: output has dropped over 50% in two decades, with economics hinging on avoiding cleanup costs rather than profitability.
Refiners may pivot to exports, but uncertainty looms.
Opportunities in renewables exist, but the transition risks energy insecurity, as seen in recent crises blamed on over-regulation.
Conclusion: A Precarious Balance
As California’s oil rush enters its final act, Newsom’s net-zero ambitions—laudable in intent—risk unintended fallout. Alaska’s reopened Arctic fields offer promise, but without California’s market, that rebound could stall. Investors on both coasts face volatility, while consumers bear the brunt of higher costs. The question remains: Has the Golden State gone too far in its war on fossil fuels, or is this the painful but necessary path to a greener future? Only time—and policy adjustments—will tell.
