California, once a powerhouse of diverse and reliable energy production, is facing what many analysts call a self-inflicted energy crisis. Under Governor Gavin Newsomâs leadership since 2019, the stateâs energy policies have accelerated the decline of its oil and gas industry, pushed for the closure of nuclear power, phased out coal, and driven electricity costs to among the highest in the nation. Simultaneously, Newsomâs aggressive push for electric vehicle (EV) mandates in both passenger cars and trucking is straining an already fragile grid. This article explores the trajectory of Californiaâs energy sector, contrasting the pre-Newsom era with the current landscape, and examines the consequences of these policies on reliability, affordability, and energy security.
I have had several podcasts on this issue as it has unfolded, and the most recent was with Ronald Stein and Mike Umbro. We have discussed the horrific policies in place, and subsequently, I have consulted with other authors and energy experts for their input. Californiaâs Energy Policies are a Problem: A Major National Risk?.
Nathan Hammer has provided some incredible statistics and charts, which I will include below.
Ronald Stein, Author and energy expert, commented, “Newsom remains oblivious to the fact that we are a materialistic society dependent on the more than 6,000 products made from fossil fuels. Newsom continues to believe that the elimination of gasoline, just â1â of the 6,000 products, with his upcoming ban on new ICE vehicles in the coming years, will clean up California. Unable to stop societyâs demand for the other 5,999 products, his war against fossil fuels has set up California, the 4th largest economy in the world, as a National Security Risk for America.”
The Pre-Newsom Era: A Balanced Energy Portfolio
Before Gavin Newsom took office in January 2019, Californiaâs energy sector was a blend of fossil fuels, nuclear power, and renewables, providing a relatively stable and affordable energy supply. In 2018, the stateâs electricity mix was diverse: natural gas contributed 34.9%, renewables (including solar, wind, and geothermal) 31.6%, hydroelectric power 14.6%, nuclear 9.1%, and coal 3.1%, with the remainder from unspecified imports (California Energy Commission, 2018). The oil and gas industry was robust, with California producing 169 million barrels of crude oil in 2018, making it the seventh-largest oil-producing state in the U.S. (U.S. Energy Information Administration, EIA, 2018). The Diablo Canyon Nuclear Power Plant, the stateâs last operating nuclear facility, reliably supplied about 9% of Californiaâs electricity, while coal plants, though diminishing, still provided baseload power.
Electricity prices in 2018 averaged 18.37 cents per kilowatt-hour (kWh) for residential customers, higher than the national average of 12.87 cents/kWh but manageable due to energy efficiency programs and a stable grid (EIA, 2018). Refineries, such as those operated by Chevron, Valero, and Phillips 66, processed Californiaâs unique low-sulfur gasoline blend, supporting a steady fuel supply despite high gas taxes. The stateâs energy policies under Governor Jerry Brown (2011â2018) emphasized renewables but maintained a pragmatic approach, delaying nuclear and coal phase-outs to ensure grid reliability.
Newsomâs Policies: A Radical Shift
Since Newsomâs election, Californiaâs energy policies have taken a sharp turn toward decarbonization, often at the expense of reliability and affordability. Newsomâs vision, articulated in his Building the Electricity Grid of the Future: Californiaâs Clean Energy Transition Plan (2023), aims for 100% clean electricity by 2045, with 90% by 2035 (California Governorâs Office, 2023). While ambitious, these policies have had profound impacts on traditional energy sectors and consumers.
Oil and Gas Industry: Regulatory Strangulation
Californiaâs oil and gas industry has faced unprecedented regulatory pressure under Newsom. The stateâs crude oil production has plummeted by approximately 35% since 2019, dropping to 109 million barrels in 2023 (EIA, 2023). Newsom signed legislation enabling local governments to block new oil wells and imposed a 3,200-foot setback rule for drilling near communities, effectively halting new permits (California Globe, 2025). Refinery closures have further tightened fuel supply: Phillips 66 announced the shutdown of its Carson and Wilmington refineries by 2025, and Valero plans to close its Benicia refinery by April 2026, eliminating nearly 18% of the stateâs refining capacity (Mercury News, 2025). These closures, attributed to restrictive regulations and high operating costs, have forced California to rely on foreign oil, which now accounts for 63.5% of refinery inputs (California Energy Commission, 2024).
Key Insight: Policy-Driven Acceleration
The decline in production isn’t just geological; it’s policy-driven. The rate of decline steepened significantly after 2019, coinciding with a new wave of environmental regulations. A key indicator is the dramatic drop in new oil well drilling permits issued, falling from 2,664 in 2019 to just 73 in 2024, a direct consequence of the state’s new policy direction. Natural gas followed the oil decline, only to impact all costs associated with the price at the pump, and prices to consumers.
The consequences are evident at the pump. As of November 2024, Californiaâs average gasoline price was $4.55 per gallon, 50% higher than the national average of $3.03 (EIA, 2024). Newsomâs responseâproposing a 15% ethanol blend to offset price hikes from the Low Carbon Fuel Standardâhas been criticized as a short-term fix that fails to address the root cause: reduced domestic production (American Energy Alliance, 2024).
Nuclear Power: A Missed Opportunity
Nuclear energy, a zero-carbon baseload power source, has been sidelined under Newsomâs policies. Initially, Newsom supported the planned closure of Diablo Canyon by 2025, aligning with anti-nuclear sentiment. However, in 2022, facing grid reliability concerns during heatwaves, he reversed course, signing legislation to extend Diablo Canyonâs operation with a $1.4 billion state loan and $1.1 billion in federal funds (KCRA, 2022). Despite this, the stateâs nuclear capacity remains underutilized, contributing just 8% of electricity in 2023, down from 17% in 2011 before the San Onofre plant closure (EIA, 2023). Critics argue that Newsomâs reluctance to embrace nuclear as a long-term solution limits Californiaâs ability to meet rising demand while reducing emissions.
Coal Phase-Out: A Hasty Exit
Coal, though a minor player in Californiaâs energy mix by 2018, was effectively eliminated under Newsom. The stateâs last coal-fired power plants were retired or converted to natural gas by 2020, and coalâs share of electricity generation dropped to near zero by 2021 (California Energy Commission, 2021). While this aligns with climate goals, the rapid phase-out removed a reliable baseload source without sufficient replacements, contributing to grid strain during peak demand periods.
On the Energy News Beat podcast, we were tracking coal consumption in California and found that the state was still using high amounts, only to discover that it was importing from other states.
Soaring Electricity Costs
Californiaâs electricity prices have skyrocketed under Newsom, with residential rates reaching 29.38 cents/kWh in 2024, nearly double the national average of 15.98 cents/kWh (EIA, 2024). Over the past decade, rates for customers of investor-owned utilities like Pacific Gas & Electric (PG&E) have risen 127%, driven by wildfire mitigation costs (13% of bills), grid upgrades, and renewable energy mandates (Los Angeles Times, 2024). Newsomâs 2024 executive order to address the âaffordability crisisâ directed the California Public Utilities Commission (CPUC) to return unused program funds to ratepayers and maximize the California Climate Credit, but critics argue these measures are superficial and fail to address systemic cost drivers (Davis Wright Tremaine, 2024).
EV Mandates: Straining the Grid
Newsomâs push for electrification, particularly through EV mandates, has placed unprecedented pressure on Californiaâs grid. The 2022 Advanced Clean Cars II rule mandates that 35% of new car sales be zero-emission vehicles (ZEVs) by 2026, rising to 100% by 2035 (California Air Resources Board, 2022). Similarly, the Advanced Clean Fleets regulation requires trucking fleets to transition to electric vehicles, with deadlines starting in 2024 (CARB, 2023). These policies are expected to increase electricity demand by 76% by 2045, necessitating 148,000 MW of new clean energy capacity (California Governorâs Office, 2023).
However, the grid is ill-prepared. In August 2022, shortly after the EV mandate was announced, California faced a 10-day power shortage, prompting Newsom to urge residents to avoid charging EVs during peak hours (Heritage Foundation, 2024). Solar and wind, which comprised 25.6% of in-state generation in 2023, are intermittent and insufficient to meet baseload needs, while battery storage lags behind requirements (California Council on Science & Technology, 2023). The stateâs reliance on natural gas (45% of generation in 2024) underscores the gap between ambition and reality (The Center Square, 2024).
The Consequences: A Fragile Energy Future
Californiaâs energy sector under Newsom faces a trifecta of challenges: declining domestic production, rising costs, and an overstretched grid. Refinery closures and reduced oil production have increased reliance on foreign imports, raising both prices and emissions from dirtier crude (X Post, 2025). Electricity costs, already among the highest in the nation, disproportionately burden low-income households, with some analysts likening the policies to a âGreen Jim Crowâ for their regressive impact (Heritage Foundation, 2024). Grid reliability remains precarious, with âflex alertsâ and near-blackouts during heatwaves exposing the limits of renewable-heavy systems (America First Policy, 2024).
According to Nathan Hammer’s research, it is clear that the State of California poses a national Security Risk by importing oil, natural gas, and other resources from foreign countries. This is not United States energy dominance; this is an albatross on the rest of the country. This is a national disaster waiting to happen.
Newsomâs defenders argue that California is leading the fight against climate change, pointing to 59% of electricity from renewable and zero-carbon sources in 2021 (California Governorâs Office, 2023). However, critics counter that the stateâs policies prioritize ideology over practicality, sacrificing affordability and reliability. Assembly Republican Leader James Gallagher summed up the sentiment: âGavin Newsomâs flawed policies have made Californiaâs energy prices the highest in the nationâ (X Post, 2025).
Looking Ahead
As California approaches 2026, the closure of additional refineries and the continued push for electrification threaten to exacerbate the energy crisis. Newsomâs recent pivot to encourage refiners to âsee the value in serving the California marketâ suggests a belated recognition of the damage (Mercury News, 2025). However, without a balanced approach that embraces nuclear, streamlines permitting for reliable energy sources, and reconsiders punitive regulations on oil and gas, Californiaâs energy sector may continue its decline, leaving consumers to bear the cost.
This poses a significant challenge for the Trump administration. As Mike Umbro has pointed out several times, California’s impact on inflation and recovery numbers are substantial enough that for President Trump to declare a win on inflation, he has to fix California. If Secretary Wright says we are looking to achieve energy dominance, California poses a significant challenge to his ability to make the US “Energy Dominant.”
President Trump’s administration is the strongest team ever assembled domestically, and we will support and watch their efforts as we move toward “Energy Dominance.”
Sources
- Nathan Hammer California Energy Crossroads
- Sandstone Asset Management
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California Energy Commission, 2018â2024: Electricity mix and refinery data.
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U.S. Energy Information Administration (EIA), 2015â2024: Crude oil production, electricity prices, and gasoline prices.
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California Governorâs Office, 2021â2023: Clean energy transition plans and proclamations.
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Los Angeles Times, 2024: Electricity cost increases and Newsomâs executive order.
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Mercury News, 2025: Refinery closures and Newsomâs shift in tone.
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California Globe, 2025: Oil and gas regulations and refinery impacts.
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KCRA, 2022: Diablo Canyon extension.
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Heritage Foundation, 2024: Critique of EV mandates and grid reliability.
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California Air Resources Board (CARB), 2022â2023: EV and trucking mandates.
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California Council on Science & Technology, 2023: Renewable energy challenges.
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The Center Square, 2024: Electricity cost analysis.
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Davis Wright Tremaine, 2024: Newsomâs affordability executive order.
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America First Policy, 2024: Grid reliability issues.
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X Posts, 2025: Public sentiment on refinery closures and energy prices.
