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U.S. Crude Is Dominating Global Oil Markets

U.S. Crude Is Dominating Global Oil Markets

Surging U.S. crude exports, particularly…

Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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California Is Aggressively Pursuing A Future Without Oil

  • California’s oil industry provides a major source of revenue for the state and creates a huge number of jobs, but that won’t stop the state’s governor from phasing it out
  • The most recent move by the government against the oil industry is a proposed 3,200-foot buffer zone on oil and gas wells near homes, schools, and hospitals
  • California’s is transitioning away from oil at a faster rate than most states, and looks unlikely to stop any time soon

Last week, California’s Democrat Governor Gavin Newsom proposed a 3,200-foot buffer zone between oil and gas wells and homes, schools, hospitals, and other populated areas across the whole of California. At present, around 5 million Californians live within 1 mile of an oil or gas well. This new rule would not apply to existing wells but would limit future well drilling. Other major oil producing states, such as Colorado, Pennsylvania, and Texas, have already introduced this type of legislation to ensure the health and safety of populations living in oil producing areas, but the California rule would be the most far-reaching should it go through.

As the seventh largest oil producing state in the U.S., with an output of around 463,000 bpd of oil equivalent, and achieving approximately $90 million annually from offshore oil and gas leases, fighting against the industry that supports the state’s economic growth may come as a shock. However, this is just the most recent of several attempts by the state government to curb the power of Big Oil. 

This comes just weeks after a major oil spill in the region prompted calls for an end to drilling. The oil spill of 126,000 gallons, or 3,000 barrels, covered an area of 13 square miles of the Pacific Ocean earlier this month, washing up on Huntington and Newport beaches and leaving dead fish, oil-covered birds and contaminated wetlands in its wake. Officials have suggested that California’s aging energy infrastructure was to blame, initially investigating a 41-year-old oil pipeline as the cause of the spill. 

Oil spills and international encouragement to move away from fossil fuels to renewable alternatives have led many environmental organisations and communities across California to put pressure on the local government to make a change. But Big Oil and state oil organisations, such as the Western States Petroleum Association and the State Building and Construction Trades Council, have long opposed several of California’s oil policies and are pushing back against environmental activists, insisting that oil revenues are vital for the state economy as well as for job provision.

There is an ongoing battle between California’s oil industry and those who benefit from oil revenues and employment and environmental groups and the liberal left who want more environmentally friendly energy policies to be introduced, in line with President Biden’s climate aims. The state government must tread a thin line between the two sides, supporting one of its main revenue producing industries as well as appealing to its large Democrat demographic. 

But Governor Newsom is not afraid to speak out against Big Oil when it comes to backing national aims for a ‘greener future’. Earlier this year, Newsom announced the aim to end oil drilling in California by 2045, starting by banning new fracking permits within three years. Newsom has approached the California Air Resources Board, the group that draws up state climate change policy, to support the development of a strategy to phase out oil and gas by 2045.

Newsom tweeted of the move, “We aren’t waiting for a clean energy future to arrive - we’re taking big steps to get there. California will end fracking & is the first state to set a date to phase out all oil extraction. We are committed to a healthier future for CA families.”

This adds to California’s progressive track record for climate-friendly policy, with the state expecting to ban gasoline-powered cars by as early as 2035. Having relied almost entirely on oil and gas for state revenues in the past, California is now a hub for several successful industries including tech, renewable energy, and automotive manufacturing. For example, one of the state’s top exports is electric cars, with the government encouraging automakers to sell more electric work trucks and delivery vans as demand grows. 

While a movement away from oil and gas in such a large producing state seems difficult, when you look at recent market trends, such as a 90 percent drop in permits for all types of oil drilling in the state in the first quarter of 2021, this seems increasingly viable. It seems we are already seeing the beginnings of a clear movement away from oil and gas in California, whether Big Oil wants to admit it or not. 

As the Cop26 climate summit is taking place, with the participation of several major world powers, encouraging countries around the world to transition their energy dependence away from fossil fuels, California is responding. The aims of liberal, urban California are gaining traction to the detriment of the small-town populations that continue to rely on the oil and gas industry. Ultimately, California looks set to back President Biden all the way in his fight against climate change and movement away from non-renewable energy.


By Felicity Bradstock for Oilprice.com

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  • Carlos Everett on October 28 2021 said:
    Felicity, interesting article, but you stopped short at the end to more accurately describe California. You indicated that Electric Cars were the future growth , I think you may want to remember the announcement by Elon Musk last month about moving their corporate headquarters to Texas and the reason for this was California Govt has turned a deaf ear to the needs of business, by elevating taxes, allowing illegal immigration, plus placing a Vacancy sign out at the state line for more benefits for the homeless and welcoming the homeless.

    I will tell you a story, that perhaps you are not aware of because you do not reside in the mid-west, more particularly, Kansas and Tennessee. The town i grew up in since the 80's has lost 30% of their population, because of the difficult times. In the past year, all of the houses in this town that were for sale have now been sold and economy has drastically improved. You might ask where did these people come from and if you are friendly you introduce yourself and you find out all of these families are from California.

    Now, we had just recently moved to Nashville, Tn and all of the homes that come on the market are sold with most having 10 -15 offers. You talk to the real estate agents and they tell you most of the people are coming from California and some from New York, trying to get away from high taxes and no longer required to work in a specific location. By the way same thing is happening in Texas, with all of the people relocating to Texas. This is not a fad, this is happening throughout the mid-west, particularly the states that do not have income tax.

    The point of the article, is if all of the high paying jobs are leaving California, yet being replaced by illegal immigration, plus all of the oil and gas jobs leaving for other locations, what do you think is going to happen to California's economy. ?

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