Background: California’s Evolving Energy Policy Landscape
California’s transition away from fossil fuels has created a complex policy landscape that must balance climate goals with energy reliability. While the state’s dependence on crude oil has declined since the 1980s, petroleum demand has recently rebounded from pandemic lows. When Governor Gavin Newsom assumed office, he took decisive steps to curb California’s dependence on oil by significantly reducing drilling permits and promoting a shift toward electric and zero-emission vehicles. However, amid persistent gasoline price increases, shrinking refining capacity, and a growing reliance on imported crude, the state has been pushed to consider renewing oil production activity in Kern County.
This shift comes as California faces a tightening energy landscape marked by declining in-state refining and production capacity. While the state produces 119,000 barrels of crude oil daily, this only supplies 23 percent of the crude feedstock used by refineries, leaving three-quarters to be imported from out of state. Additionally, out of the state’s 13 petroleum refineries, which produce about 900,000 barrels of refined products per day, two major ones—Valero and Martinez—are set to close by early 2026, which would cost the state 17 to 20 percent of its gasoline production capacity. Not only would this increase reliance on costly fuel imports, but it could heighten geopolitical risks and push gas prices above $8 per gallon.
In this context, boosting local oil production is viewed as a strategy to partially offset the disruptions in the refining sector. Thus, S.B. 237 reflects a complex balancing act between California’s long-term climate goals and immediate energy security demands and economic stability. This challenge reflects a notable policy shift for Newsom, who has long positioned himself as a national climate leader and previously asserted that “California needs to move beyond oil.”
Introduction
In September 2025, the California state legislature passed the California Energy Affordability and Security Act (S.B. 237), a bill permitting the development of new oil wells each year.
Specifically, the bill is set to:
- Issue up to 2,000 new drilling permits annually over the next 10 years in Kern County–California’s long-standing hub of oil production.
- Streamline the permitting process by modifying the California Environmental Quality Act (CEQA) review for approved permits, limiting environmental review and expediting approvals.
- Enable the governor to suspend California’s requirements for “summer blend” gasoline, which contributes less smog but is more expensive, under certain circumstances to protect against extreme gasoline price increases.
- Require any existing oil pipeline that is six inches or larger and has been idle, inactive, or out of service for at least five years to not be restarted without passing a thorough testing program.
- Examine the potential of creating a regional fuel blend to expand the supply of gasoline available and protect against price spikes when a refinery goes down.
- Formalize the work of the California Energy Commission to stabilize fuel supply in the near term.
- Strengthen regulations for offshore drilling by mandating stricter environmental and safety precautions.
Arguments in support of S.B. 237
S.B. 237 Supports Domestic Production and Strong Oversight
Supporters of the bill assert that it strengthens California’s energy independence and reduces its reliance on costly, foreign oil imports, thereby providing stable revenues. Industry representatives emphasize that existing policies have long compelled California to spend roughly $25 billion annually on oil imported from countries that fail to meet U.S. environmental, labor, and human rights standards. S.B. 237, they argue, would help reverse this trend by promoting the use of domestically produced energy that aligns more closely with California’s values and regulatory expectations.
S.B. 237 Creates Jobs and Supports Economic Stability
Senator Shannon Grove, the bill’s author, emphasized that S.B. 237 is designed to enhance California’s energy resilience and economic stability by expanding responsible oil production in Kern County. The 2000 new annual well permits will help sustain a reliable and affordable energy supply while creating jobs and providing greater stability for both producers and consumers. Grove further noted that by restoring local production capacity, the measure aims to keep fuel prices stable for families and support the state’s broader goal of maintaining an economically secure energy sector.
S.B. 237 Maintains Environmental Standards
Supporters also maintain that the bill aligns with California’s stringent environmental standards by operating within existing regulatory frameworks designed to protect air quality, water resources, and public health. They point out that local energy production reduces the environmental footprint associated with transporting imported crude oil because local producers operate under stricter oversight than foreign suppliers, thus ensuring safer, cleaner, and more accountable energy production.
Senator Mellissa Hurtado highlighted Kern County’s Environmental Impact Report as a model framework for balancing production efficiency with environmental protection—an approach she said enhances energy reliability and affordability for Californians. Similarly, the Kern County Board of Supervisors argued that the county’s long-standing success in attracting billions in private energy investment proves that local permitting aligns with clean energy goals. They contend that S.B. 237 strengthens this balance by protecting consumers from supply disruptions, boosting investor confidence, and reaffirming Kern County’s role as a leader in environmentally responsible energy development.
Arguments Against S.B. 237
Health and Safety Concerns
S.B. 237 has been subject to a variety of criticisms, with over 45 organizations opposing the bill. Firstly, they argue that the legislation endangers public health, environmental safety, and California’s climate progress. They contend that it lacks adequate public input, and could pave the way for thousands of new oil wells each year, increasing exposure to toxic pollution and health risks for nearby communities.
S.B. 237 Weakens Environmental Protections
Critics of the bill argue that it is a concession to the Big Oil industry, and warn that it could weaken environmental protection efforts, worsen local pollution, and counter the state’s clean energy goals. To them, S.B. 237 is a rollback of vital environmental protections, including those established under the CEQA, and undermines decades of efforts to reduce the harmful effects of oil drilling.
S.B. 237 Conflicts with California’s Climate Commitments
The Environmental Defense Center argues that several sections of S.B. 237 conflict with California’s long-term climate commitments. They warn that it would expand oil production in the state and undermine existing clean-fuel standards designed to reduce emissions. According to the organization, California should be accelerating its transition away from fossil fuel extraction and consumption rather than adopting policies that could prolong its dependence on oil. They further note that California’s demand for petroleum is steadily declining, which they view as evidence that the state should continue pursuing cleaner energy pathways rather than expanding oil development.
S.B. 237 has Questionable Impacts on Fuel Prices
Critics reject claims that increased in-state drilling will stabilize fuel prices or offset refinery closures, noting that California’s oil fields are already depleted and that new permits would not significantly boost crude production. Hollin Kretzmann, an attorney with the Center for Biological Diversity stated that “Removing environmental safeguards won’t reverse the terminal decline of California oil production but it will allow the industry to do more damage on its way out the door. This bill would mean more air, water and greenhouse gas pollution while having no impact on refinery closures or gas prices.”
S.B. 237 was Enacted Under a Flawed Legislative Process
The bill was introduced and approved during a rushed 72-hour legislative window—the shortest period legally permitted for a bill’s passage. By moving the measure forward without meaningful consultation from key stakeholders, Governor Newsom and legislative leaders have drawn criticism for perpetuating a troubling pattern in which powerful industry interests can influence policy outcomes through closed-door negotiations and limited scrutiny. A policy shift of this magnitude, critics argue, should not be rushed through in the Legislature’s final hours without transparent hearings and thoughtful debate.
S.B. 237 Deepens Racial and Climate Injustices
In Kern County, roughly one-third of oil and gas fields located near homes, schools, and other sensitive areas have been found to leak hazardous emissions for months at a time due to gaps in leak detection and repair regulations. Critics emphasize that increased in-state drilling would exacerbate environmental inequities, disproportionately burdening low-income communities, and reverse decades of progress made to protect these populations.
Conclusion & Future Outlook
The passage of S.B. 237 marks a pivotal test of California’s ability to balance environmental priorities with economic realities. The law’s implementation will demand transparency, strong oversight of drilling impacts, and creative use of revenues to support renewable energy and workforce retraining. While it may deliver short-term stability for oil-dependent regions, it also amplifies environmental and public health risks, underscoring the need for regional collaboration and adaptive governance. Ultimately, California’s handling of S.B. 237 will serve as a telling case study in how a leading climate state manages the competing pressures of energy security, economic resilience, and its long-term decarbonization goals.