Gavin Newsom weighs limited oil production as California faces 63% dependence on foreign crude

Sacramento, California – As California prepares to shut down two of its remaining oil refineries, Governor Gavin Newsom is reviewing a set of state agency recommendations that could open the door—albeit narrowly—to increased in-state oil production. The move signals a shift in tone, if not policy, as the state confronts mounting pressure to keep fuel prices stable and supply chains intact during a volatile and uncertain phase in its clean energy transition.

The recommendation, submitted by California Energy Commission Vice Chair Siva Gunda, urges the state to consider “targeted stabilization” of oil production. That would mean tapping existing, densely developed oil fields—particularly in Kern County—to keep refineries running until renewable infrastructure can scale to meet demand. New drilling near schools, homes, or health-sensitive zones would remain off-limits, and all activity would still be subject to California’s environmental protections.

The proposal comes at a precarious moment. California has led the nation in its transition away from fossil fuels, slashing gasoline demand, boosting electric vehicle adoption, and reducing tailpipe emissions. But that success has created a paradox: the more aggressively the state moves away from oil, the more vulnerable it becomes to shocks within the shrinking petroleum infrastructure it still relies on.

That vulnerability is now acute. Valero’s Benicia refinery is set to close this spring. Phillips 66 will shutter its Southern California plant by fall. More than 60% of California’s oil is imported, mostly from nations like Iraq and Ecuador. And global instability—including recent flare-ups in the Middle East—has put further strain on the state’s fuel supply. Refinery closures leave fewer domestic options, raising concerns about sudden price spikes, infrastructure gaps, and overreliance on volatile foreign markets.

Speaking this week, Newsom acknowledged the complexity of the issue but resisted framing it as a retreat. “I’m not naive about the imperative of a rational transition,” he said. “This is not rolling back anything. It’s marching forward in a way that is thoughtful and considered.”

Still, for many climate advocates, the optics are uncomfortable. The state that has banned fracking and pledged to phase out gas-powered vehicles may soon authorize a modest bump in oil extraction. Even supporters concede the idea runs counter to the long-term vision of a decarbonized economy—but argue that failing to act in the short term could undermine public support for that very transition.

California’s petroleum market, Gunda’s letter notes, is entering a “mid-transition” phase—where petroleum demand is declining, but not fast enough to abandon the infrastructure that still supports millions of residents. That uncertainty has chilled investment in oil refining and distribution, creating what the letter describes as a credible risk of further refinery exits and infrastructure disrepair.

To bridge the gap, the state is weighing three strategies: stabilizing fuel supply through refined fuel imports and existing refinery retention; maintaining confidence among investors and operators in the aging petroleum system; and accelerating the build-out of alternative fuels and infrastructure.

For now, the decision rests with Newsom. Whether he greenlights targeted production or finds another way forward, the moment underscores the uncomfortable truth at the heart of the energy transition: moving quickly is essential—but moving blindly can cause collapse.