The Trump Administration has announced plans for new offshore oil leases in California to boost U.S. energy security and jobs. The administration also helped a Texas firm restart a pipeline system in California that had been idled since 2015 when a rupture caused an oil spill. The pipeline will help move the oil to export terminals as California’s shrinking refinery industry will not be able to process the additional oil. Federal officials also recently took a step toward authorizing fracking on an oil platform 9 miles off Ventura County. California has some working offshore rigs, but there has been no new oil leasing in federal waters since the mid-1980s and no new state leasing since before that. The state barred new offshore oil leases after an oil spill in 1969.
Oil producers in California are exploring plans to export heavy sour crude oil in 2027, as existing refineries cannot process it. Two California oil refineries (Phillips 66’s 139,000-barrel-per-day refinery in Los Angeles and Valero’s 145,000-barrel-per-day Benicia complex) closed within the last year, adding to the numerous earlier closures that have arisen due to California’s anti-oil and gas policies, including a goal of reducing gasoline use to one-tenth its current consumption by 2045. California’s gas taxes, boutique fuel-blend requirements, and other costly add-ons add over $1.60 per gallon to the national average price of gasoline sold in the state. California has also led the way in banning internal combustion engines and pushing drivers into electric vehicles. Together, these factors have reduced California’s refinery capacity to the point that it cannot handle additional oil sourced from the state.
State officials have tried to encourage more local oil production to stem the impact of refinery closures and moderate gas and diesel prices, despite the state’s anti-oil posture. Argus reports that earlier this year the state approved about 380 onshore oil drilling permits in Kern County to stabilize fuel supply. But so far, the new permits have not increased oil supply, as producers are wary about the future of oil production and processing in the state, which is promising an “oil-free future”.
Oil production in California has been in long-term decline, more than halving from its 2016 average to 246,000 barrels per day in the first half of 2026. Central California produces around 80% of the oil. According to Argus Media, producers are considering moving the heavy San Joaquin Valley oil along the 265-mile San Pablo pipeline system north to San Francisco and south to Los Angeles for loading onto waterborne tankers. Loadings at the terminals may be limited to partially full Aframax or Panamax tankers because of draft restrictions. The San Pablo Bay pipeline system shut down earlier this year, in part because of the refinery closures. The California Resources Corporation, the state’s largest producer, recently paid $63 million to purchase the pipeline system’s operator, Crimson Midstream Holdings.
The first export oil cargo may be available in the first quarter of 2027, with potential destinations being the Asia-Pacific region and Washington state—the latter if the Jones Act waiver is maintained, which would allow foreign ships to move the oil rather than more expensive U.S. ships. No oil produced in California has been exported via ship since at least 2016, when records began.
The Jones Act is a 1920 law requiring that goods be transported between American ports by U.S. vessels with U.S. crews. It was intended to grow the domestic shipping industry after World War I. However, it raised prices on all consumer goods, especially energy, by limiting the mobility of U.S. products between U.S. ports. President Trump issued his first 60-day waiver of the Jones Act on March 17, less than three weeks after the U.S.- Iran conflict started. The Trump administration extended the waiver in mid-May for another 90 days. The latest 90-day extension, which is more restrictive, should last until mid-November. The latest extension applies only to vessels hauling certain energy resources.
Conclusion
The Trump administration wants to increase oil production in federal waters off California’s coast. In addition to planning to offer new offshore leases, the administration has taken steps to authorize fracking on an offshore platform and helped a Texas firm restart a pipeline system that had been idled since 2015 due to an oil spill. No new oil leasing has occurred in federal waters off California since the mid-1980s. With recent refinery closures in California, oil producers are considering exporting oil to the Asia-Pacific region and to Washington state if President Trump continues to extend the Jones Act waiver, which would allow foreign tankers to ship the oil.
