What Has California’s War On Fossil Fuels Actually Accomplished?

What Has California’s War On Fossil Fuels Actually Accomplished?

Nick Pope on January 7, 2024

California has gone after the fossil fuel industry with vigor, but those efforts do not seem to have made much impact on climate change while proving detrimental to the state’s economy.

The state’s long-term and ongoing efforts to undermine energy production within its borders have effectively displaced, rather than reduced, fossil fuel production — and jobs related to that production — to other states and areas of the world while U.S. oil production is at record levels. California’s anti-fossil fuel push also has not moved the needle much on climate change, which alarmists continue to insist is accelerating at a dangerous pace, but it has raised energy costs for Californians, diminished grid reliability and disincentivized corporate investment that would create or maintain jobs in the state, energy policy experts told the Daily Caller News Foundation.

In the first week of 2024, Chevron, a California-based oil major, announced that it is writing down its existing interests in California by more than $4 billion, a move largely prompted by the state’s burdensome environmental regulatory structure. Exxon Mobil, the largest oil company in the U.S., announced Friday that it is also impairing its California assets, similarly citing regulatory challenges in the state.

While the companies are writing down the value of their operations in California, they are making major plays to expand the scope and scale of their interests in states that are more amenable to energy production, especially Texas. Chevron and Exxon Mobil acquired Hess and Pioneer Resources, respectively, in late 2023. While the deals are not yet finalized, Hess and Pioneer each have considerable portfolios in Texas’ Permian Basin that made each smaller firm an attractive target for acquisition by major competitors.

Meanwhile, the U.S. is producing about 13.2 million barrels of oil per day, a number that stands as a record high, according to Forbes.

“For well over two decades now, politicians like Governor Newsom have hammered California’s conventional energy producers, both large and small, with excessive taxes, regulations, and threats of profit taking … Large companies can better withstand the onslaught of red tape, but smaller producers can ill afford the book the types of liabilities being saddled on the industry,” Tom Pyle, president of the American Energy Alliance, told the DCNF. “Many companies have already moved out of the state, along with hundreds of thousands of residents as a result of these and other harmful policies … like a cap on profit margins, that hurt consumers by making conventional energy investments uneconomic. These types of policies have outsourced jobs to other states and increased California’s reliance on oil and electricity imports — all with little or no environmental benefit.”

California’s local oil and gas production provides about 50,000 jobs statewide, including 31,000 jobs in the San Joaquin Valley, a region that is generally less economically successful than other parts of the state, according to Californians for Energy Independence.

California was one of the leading states of the U.S. in terms of oil production in 2022, with operators in the state pumping more than 124 million barrels that year, according to data from the U.S. Energy Information Administration (EIA). The state saw its local oil and gas production drop by nearly 30% over the course of the last four years, according to EIA data, a trend which Californians for Energy Independence attributes primarily to “state and local energy policies shutting down production.”

The state is widely considered to be on the leading edge of climate policy, according to Stateline. Away from the regulations focused on oil and gas production, the state has pushed aggressive electric vehicle and truck rules, filed a climate change lawsuit against Chevron and other oil majors alleging that they deliberately tried to mislead the public about the nature of climate change and enacted a landmark corporate emissions disclosure requirement.

With regard to the lawsuit against the large oil firms, Democratic California Gov. Gavin Newsom has been openly hostile in his remarks about the defendants, painting them as liars.

“The state is home to well-understood, rich reserves of oil and natural gas that Democrat policies have rendered non-economic to produce. California’s ruling Democrats have destroyed tens of thousands of high paying jobs that would otherwise be employed in the oil and gas industry in efforts to take advantage of those resources,” David Blackmon, a 40-year veteran of the oil and gas business who now consults and writes regularly about the energy industry, told the DCNF. “The supreme irony in all of this, of course, is that Newsom has created a situation in which his state now imports most of its oil from a fellow economic basket case — Venezuela — to meet its consumption needs that the US domestic industry could easily satisfy if it were allowed to access California’s own oil and gas resources.”

The current average per-gallon gas price at the pump that Californians pay is about $4.70, which is the highest such price in the country, according to AAA data. By comparison, the national average currently sits at about $3.09 per-gallon.

Beyond energy production and high fuel prices, the residential ratepayers in the state faced the second-highest average retail electricity rates in the entire U.S. in October 2023, according to the most recent monthly data published by the EIA.

“Extreme events driven by climate change are leading to increased demand for power and putting the electric grid at increased risk of outages — in California and beyond. Events include extreme heat and wildfires that threaten the grid with growing frequency and intensity,” a spokesperson for the California Energy Commission (CEC) told the DCNF. “Electrifying California’s economy and building a reliable, safe, affordable and clean electric grid are cornerstones of both our climate leadership and our economic plan for the future. The state is taking action on multiple fronts.”

Additionally, the state’s power grid has come very close to blackouts in recent years, particularly in September 2022, when California’s grid operator urged residents to turn up their thermostats during the late afternoon and evening hours to conserve energy for ten consecutive days amid a heatwave that strained the grid’s reliability.

“Reasonable people might expect that state governments would do as much as possible to make the lives of residents easier. Unfortunately, California’s government is doing just the opposite,” Diana Furchtgott-Roth, the director of the Heritage Foundation’s Center for Energy, Climate and Environment, told the DCNF. “That’s one reason why 75,000 people left California over the past year, according to the Census Bureau.”

Power supply adequacy is such an issue in the state that Newsom decided to refill the Aliso Canyon gas storage facility to protect against energy price spikes and blackouts in August; Newsom had previously made a campaign promise to shutter the facility. That same month, the CEC voted against shuttering three fossil fuel-fired plants in Southern California to keep them available in order to stave off blackouts if needed.

“The people of California deserve to know when their state-wide green agenda will begin to work, and by ‘work’ I mean when will both grid reliability and overall costs reflect the promises made by going green. California’s price at the pump and cost of electricity are among the highest in the nation, and only continue to increase, while the electric grid grows more unstable,” Daniel Turner, executive director and founder of energy advocacy group Power The Future, told the DCNF. “Green-backed elected officials including Governor Newsom have promised that going green will be a benefit, and yet the only result has been pain for the average Californian who is unable to flee the state like hundreds of thousands have already done … In no place where ‘going green’ has been implemented has it been a benefit to the people: not Germany, not California, not New York.”

Newsom’s office and the California Independent System Operator did not respond immediately to requests for comment.