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Home > Sangre Celestial > Concerned about gas prices, Newsom pivots to supporting more oil drilling
Podcast: Sangre Celestial
Episode:

Concerned about gas prices, Newsom pivots to supporting more oil drilling
Category: Arts
Duration: 00:00:00
Publish Date: 2025-08-20 19:00:00
Description: California Governor Gavin Newsom last year accused oil companies of “ screwing ” customers. But now he wants to increase oil drilling in Kern County, among other measures, to prevent a possible spike in gas prices in 2026, which happens to be an election year (although not for him because he’s term-limited). The price hike could be as much as an extra $1.20 per gallon. Alex Nieves, California transportation reporter for Politico, tells KCRW that Newsom’s move is “head-spinning” for many people, especially after he spearheaded a lawsuit to hold big oil companies liable for climate change damages, and pushed to limit their industry profits. The simple explanation for Newsom’s pivot, Nieves says, is that California is facing two looming refinery foreclosures: Phillips 66 in LA and Valero in the Bay Area. He notes that Phillips 66’s Wilmington-based facility, one of the older ones in the state, has been showing signs of reaching the end of its lifespan. The surprising move is Valero’s plan to close its relatively younger Benicia-based refinery in April 2026. “We don't know exactly what the reason is, although Valero was slated to do some major upgrades on that facility next year. The oil industry and folks who say that California is going too far in its stringent transition — argue that the state is just not a good place to do business, and it is incumbent on a company like Valero to think about other options, moving out of state, looking at international markets,” Nieves says. He notes that many refineries can bring in oil imports — but some argue that it’s more expensive to take in oil from overseas, and a refinery like Valero is specialized to refine crude oil from Kern County. Meanwhile, drivers going to the pump in California are paying an average of $4.49/gallon. A few factors influence why prices here are more expensive compared to other states, Nieves says. The first: California has some of the country’s strongest climate programs — such as cap and trade and our low carbon fuel standard — that add 20-30 cents per gallon. The second: California has higher gas taxes, about 61 cents per gallon. The third: “the mystery surcharge,” coined by UC Berkeley economist Severin Borenstein. This means oil companies are making about 50 cents of profit per gallon in CA, which they don’t make in other states. The fourth: California is a “fuel island” — we can’t import fuel through pipelines from neighboring states, and so we rely on in-state crude or fuel shipped from abroad. As for environmentalists’ reactions to Newsom’s turnaround, they’ve been mixed. The Environmental Defense Fund hasn’t fully supported the governor’s proposal, but says it contains things worth considering, and the state needs to think about affordability, Nieves reports. “On the flip side, a lot of folks in the environmental justice community who are working in these regions where folks are living close to refineries, they're livid. And they say this is a retreat from real progress that Gavin Newsom made in recent years, and that this is simply going to expose residents to higher levels of pollution that causes asthma … heart disease and premature death in a lot of Black and Brown communities.” President Trump’s budget also ends federal tax breaks for electric cars, and ends investment in charging stations nationwide. Nieves says Gov. Newsom is hoping to replace that tax credit with funding from elsewhere. Is the governor doing all this for political reasons, given 2026’s midterm elections? “Any politician in the state is always thinking about gas prices. … If you don't get it right, it can lead to a recall. It can really hammer your party. So he is thinking about Congress and his own members who are going to be up in the midterms in 2026, and really trying to push back on Trump and Republicans’ wins … in 2024 on that cost-of-living message. But I think we all assume: He is positioning himself for a presidential run in 2028. And he also doesn't want to be seen as the governor who was in charge when gas prices went up over $1.20 in the state,” Nieves says.
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