California Issues

California’s petroleum industry produces more crude oil than all but three other states – Texas, North Dakota and Alaska. The state’s gasoline consumption ranks third in the world, behind the United States as a whole and China. The state’s 14 refineries that produce gasoline and diesel supply consumers in all or portions of California, Arizona, Nevada and Oregon.

Despite its productivity, California effectively is an “oil island,” producing less than 40 percent of its own daily oil need and relying on supplies from other domestic and international sources. These external oil supplies must come to the state in tankers because no pipelines link California to other crude oil production and refining regions. The industry faces additional supply challenges in producing multiple annual fuel blends that meet the state’s demanding clean fuel standards.

WSPA addresses a range of other California public policy matters, including:

Cap and Trade

WSPA and its members have been and continue to be focused on Governor’s call for legislation extending the cap and trade program with a 2/3 vote. Securing the necessary 2/3 vote for a cap and trade extension bill will be difficult but WSPA and its members are committed to working with the Legislature and all stakeholders towards that end.

After increasing the tax on transportation fuels for Californians this year, we hope that the Legislature will work to identify and support the most cost effective cap and trade program that minimizes the additional cost increases on transportation fuels that will be faced by all Californians in order to achieve California’s climate change goals.

LCFS

WSPA and its member companies believe focusing on a market mechanism to achieve California’s climate goals is the prudent approach. A Low Carbon Fuel Standard (LCFS) and other direct command and control regulations are artificially depressing the market and some stakeholders are pushing to get rid of the cap and trade program entirely, which undermines the certainty of the program, leading to meager results and an unsustainable market.

Off shore oil extraction

New oil leases off the state’s shores have been prohibited since 1969. In California, offshore wells located in state waters are regulated by the California Division of Oil, Gas and Geothermal Resources (DOGGR), the State Lands Commission (SLC) and the California Coastal Commission (CCC). All wells within the state’s jurisdiction, including those offshore, are now subject to California’s rigorous new regulations for hydraulic fracturing, SB 4.

Offshore oil extraction is a vital source of domestic energy upon which California’s citizens and economy depend. Offshore and onshore production accounts for less than half of the oil our state uses on a daily basis; the balance is produced in other nations and brought to our shores across the ocean in tankers.

In May 2016, a report targeted in the state’s lawsuit was prepared in accordance with the requirements of the National Environmental Policy Act (NEPA) and evaluating a wide range of potential environmental impacts from offshore oil production.  This thorough investigation, based on the best available science, led to the conclusion that the risk of an accidental release and other risks from use of well-stimulation chemicals are very low.

Related News & Resources