The last time oil flowed through the Santa Ynez pipeline off Santa Barbara, it was 2015 — and it ended with 140,000 gallons of crude on Refugio State Beach. On Friday, Trump ordered it turned back on.
There are various reasons why oil production has slowed in California, but that is about to change.
Companies and the state will have no choice but to restart shuttered operations now that Trump has invoked his presidential powers.
The reality is that California oil production has been slowing for decades, for many reasons. Current permits were running dry, costs were going up due to regulations, and administration after administration refused to issue new permits.
With the big green push in California, oil companies started to look elsewhere to drill, and that number kept going down.
The truly big blow, however, came in 2015 when Sable Offshore Corp.'s Santa Ynez Unit and Santa Ynez Pipeline System were shut down after the Refugio oil spill.
A settlement has since been proposed to dedicate $22 million to restore the natural resources that were damaged by the spill, according to a DARRP report.
After years of putting the boot on the throat of the fossil fuel industry, California Governor Gavin Newsom realized he was cutting off his nose to spite his face, and he tried to reignite the industry.
However, climate regulations were making it impossible for the industry to even consider expanding operations in the state. Chevron spokesperson Ross Allen stated, "They're setting us up to fail and making sure that imported products will be cheaper and more available to California consumers than in-state production.”
California Air Resources Board sets the state regulations, with Allen adding, "The new wrinkle, though, is that the state is making stationary sources like refineries or other manufacturers purchase permits to operate in the state,” reported ABC News 7.
Allen was not against operating in the state, but he said it needed to be “comfortable,” and right now, for oil companies, California is anything but.
Things are about to open up, as Energy Secretary Chris Wright announced that the administration was invoking the Defense Production Act. Fox Business reported that the DoE stated, "California once supplied nearly 40 percent of U.S. oil production, but decades of radical state policies targeting reliable energy sources have driven a decline in domestic output while fuel demand remains among the highest in the nation. Today, more than 60 percent of the oil refined in California comes from overseas, with a significant share traveling through the Strait of Hormuz—presenting serious national security threats."
This operation is capable of producing about 50,000 barrels a day, which would increase California's current production by about 15%, a significant increase. The argument against restarting this operation is that it is only about 0.05% of global production, but that is not why Trump wants this restarted. This is specifically about impacting US oil prices, and even more specifically about lowering California gasoline prices.
You would think Newsom would be happy that Trump is forcing oil to flow, but he is just the opposite, stating, "California will not stand by while the Trump administration attempts to sacrifice our coastal communities, our environment, and our $51 billion coastal economy. The Trump administration and Sable are defying multiple court orders, and we will see them back in court."
This will be a dog fight, but Trump has the weight of the DPA behind him. The question, however, is if the DPA can truly override the court orders in place due to the massive spill that took place in 2015. One thing that could hurt the administration as this works its way through the courts is that Trump’s plan to restart these operations was already in discussion before Operation Epic Fury, but now it is the framing for the DPA being used. This case will likely be expedited, so we should have an answer soon.
