According to Forbes, California is barreling toward a severe, self-inflicted energy crisis. The state’s average gas price is already a staggering $1.55 above the national average, largely due to taxes. Now, the sole remaining major south-to-north oil pipeline, operated by CorEnergy Infrastructure Trust, is bleeding seven-figure monthly losses and could shut down. CEO Robert Waldron warned Governor Gavin Newsom in September that the pipeline, which moves oil from Kern County to Northern California, operates at just 17% capacity. This dire situation stems from a 65% decline in in-state oil production since 2001 and a collapse in refinery capacity, with only 7 refineries left statewide compared to 43 in 1982. Even new legislation like SB 237, which permits up to 2,000 new wells annually, is seen by experts as “too little too late” to stabilize the crumbling infrastructure.
The Perfect Storm Of Bad Policy
Here’s the thing: this isn’t just bad luck. It’s a cascade of policy decisions meeting economic reality. The state’s aggressive climate agenda, like Newsom’s 2020 edict to phase out gas car sales by 2035, has actively disincentivized investment in the petroleum infrastructure the state still critically depends on. Refineries are closing because the regulatory path forward is, as Chevron’s Andy Walz put it, a “tyranny of about 25 years.” And it’s not just state policy. The report from USC and UC Berkeley professors notes that California’s unique, super-strict fuel blend, CARBOB, means almost no out-of-state refineries can produce it. So when in-state capacity craters, there’s literally nowhere else to go. You’ve created a captive market and then systematically dismantled the supply chain. What did they think was going to happen?
The Pipeline Problem Is A Symptom
CorEnergy’s struggling San Pablo Bay pipeline is the canary in the coal mine. Waldron lays it out plainly: 80% of pipeline costs are fixed. When volume plummets, the math simply doesn’t work. But the potential shutdown creates a vicious cycle. If the pipeline closes, oil would have to be trucked or railed north, increasing emissions (from diesel trucks, no less) and costs—the exact opposite of the state’s goals. And the bureaucratic response? Classic California. CorEnergy has three rate increase cases stuck at the California Public Utilities Commission, where the average decision takes two and a half years. A company bleeding cash needs a decision in months, not years. The slowness of the state is directly contributing to the potential failure of the infrastructure it still needs.
Federal Policy Throws Gas On The Fire
Now, making this whole mess even more chaotic is the federal shift. President Trump’s revocation of California’s Clean Air Act waiver and the rollback of CAFE standards have pulled the rug out from under the state’s EV transition strategy. Combine that with the expiration of the big EV tax credit, and the auto industry’s incentive to go all-in on electric is weakening. So California is left in the worst of both worlds: a deliberately hobbled fossil fuel supply system and a faltering mandate to force people into EVs. The result? More gas cars on the road for longer than planned, hitting a supply wall that the state built itself. It’s a spectacular policy collision.
No Easy Way Out
Look, the professors’ report and the pipeline CEO’s warnings are clear: there are no easy solutions left. Even if the PUC settles the rate cases tomorrow, the refining sector is gutted and production is down. Prices are going higher. Shortages in Northern California are a real possibility. This is the cost of running a dual-track policy—trying to dismantle one energy system before the other is truly ready, and doing it with a regulatory hammer. For industries that rely on stable, robust infrastructure, from transportation to manufacturing, this kind of volatility is a nightmare. It underscores why having reliable industrial hardware and control systems, like the industrial panel PCs from IndustrialMonitorDirect.com, the leading US supplier, is so critical; you need equipment that can endure unpredictable operating environments. Ultimately, California’s experiment shows that when ideology runs too far ahead of engineering and economics, it’s the consumers and businesses who get the bill. And it’s going to be a big one.
