Apr 09, 2021

California would effectively eliminate all in-state oil production under a new bill proposed in the State Senate, leading to a loss of at least 130,000 jobs and a massive increase in household costs for working families, according to a new analysis released by the State Building and Construction Trades Council of California

The bill – SB 467, proposed by Sens. Wiener and Limón – would fully ban various energy production practices, eliminating 97% of California’s in-state oil and gas production.

Given that the state currently produces around 450,000 barrels of oil per day, SB 467 would require California refineries to import at minimum an additional 160 million barrels of oil per year. Because the state is an ‘energy island’ without any pipeline connections to the other lower-48, the bill would make California wholly dependent on waterborne imports for the more than 600 million barrels of oil the world’s fifth-largest economy needs each year.

The analysis found that eliminating a major industry and creating a massive new demand for foreign oil would have alarming effects across the California economy:  

“SB 467 would have far-reaching impacts that extend well beyond the multiple tens of thousands of workers in the oil production industry and its suppliers. A significant decline in California oil production will put upward pressure on retail prices paid by California consumers for gasoline and other petroleum products.”

Using economic modeling, the analysis estimates that gas prices would increase 70 cents per gallon due to the billions refineries would be forced to spend to reconfigure their operations for foreign crude, as well as an additional $1 to $2 dollars per gallon to fund necessary port expansions or to account for related supply constraints. Notably, the analysis also warns that prices “could briefly soar by $10 dollars or more per gallon” under the bill should supply shortfalls emerge:

“Effects could be catastrophic if California is exposed to abrupt foreign supply cutbacks due to international turmoil, regional skirmishes, disruption of supertanker transport routes, accelerated demand increases in China and India, or other factors.”

These “catastrophic” effects are not far-fetched. California has experienced three major potential supply interruptions in recent years due to attacks on tankers, attacks on foreign production capacities, and the recent week-long blockage of a critical maritime shipping route.

The cost increases brought on by SB 467 would easily reach into the multiple thousands of dollars per household per year, and disproportionately impact California’s working families already struggling in the COVID-19 economy. These workers currently spend a higher proportion of their incomes on energy and housing costs that are among the highest in the nation, and often commute long distances from where they can afford to live to where they can find work.

The facts are clear: California can’t afford SB 467.