California Lawmakers Pass Bill to Stabilize Struggling Oil Refineries
In a move to address growing concerns about affordability and the planned closure of two oil refineries, California state lawmakers have passed a last-minute bill to allow the construction of 2,000 new oil wells annually in the San Joaquin Valley. The bill, Senate Bill 237, aims to stabilize the energy market in the short term while the state transitions to clean energy. According to industry experts, California currently has enough refining capacity to meet demand, but the closures could reduce the state’s refining capacity by about 20% and lead to more volatile gas prices.
A Deal Brokered Behind Closed Doors
The measure was part of a deal on climate and environmental issues brokered by Gov. Gavin Newsom, state Senate President Pro Tem Mike McGuire, and Assembly Speaker Robert Rivas. Democrats have framed the vote as a necessary step to stabilize the energy market, even as the state pushes forward with its transition from fossil fuels to clean energy. McGuire called the bills the “most impactful affordability, climate and energy packages in our state’s history,” stating that they will “put more money in the pockets of hard-working Californians and keep our air clean, all while powering our transition to a more sustainable economy.”
The planned closure of Valero’s refinery in Benicia in April 2026 is expected to lead to a loss of $1.6 billion in wages and drag down local government budgets. Assemblymember Lori D. Wilson, who represents the area and co-authored SB 237, acknowledged that the bill won’t help the Benicia refinery but said that increasing domestic production of crude oil and lowering reliance on imports will help stabilize the market and create jobs. Crude oil production in California is declining at an annualized rate of about 15%, which is 50% faster than the state’s most aggressive forecast for a decline in demand for gasoline.
Environmental Concerns and Opposition
Environmentalists have expressed concerns over the trade-off, particularly the provision that allows the governor to suspend the state’s summer-blend gasoline fuel standards if prices spike for more than 30 days. Some progressive Democrats, including Assemblymember Alex Lee, voted against the bill, calling it a “regulatory giveaway to Big Oil” that will do little to stabilize gas prices or refineries. Lee stated that the focus should be on the future, not the past, and that the state needs to continue transitioning to clean energy.
The bill also includes measures to make offshore drilling more difficult by tightening safety and regulatory requirements for pipelines. Additionally, lawmakers voted to extend the cap-and-trade program, which sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances. The program has been renamed “cap and invest” and will be extended through 2045, generating billions in revenue to fund climate efforts, including high-speed rail and safe drinking water programs.
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