California lawmakers pass bill to boost oil production

By Nicole Jao

NEW YORK (Reuters) -California lawmakers passed a bill over the weekend that would allow the construction of thousands of new oil wells annually in the Golden State in a bid to make oil supply more affordable for refineries and keep fuel prices in check for consumers.

The new bill, SB 237, would award the oil-rich Kern County up to 2,000 permits each year, effective January 2026. The aim is to have California oil producers supply close to 25% of crude to the state's refinery complex and help reduce costs for retail consumers of gasoline in the state.

Last year, California produced 119,000 barrels per day of oil and its producers supplied around 23% to refineries in the state, according to the California Energy Commission.

Two refineries that make up around 17% of the state's gasoline production capacity are slated to close within the next year. The shutdowns, alongside other closures and refineries converted to produce renewable fuels, are expected to leave California even more dependent on costlier fuel imports that would further drive up prices.

"Few issues are more politically sensitive than gas prices at the pump, and with Governor (Gavin) Newsom widely expected to run for president in 2028, rising pump prices and declining in-state production have suddenly become top of mind concerns," said Josh Young, chief investment officer at Bison Interests.

"In response, his administration is advancing a significant policy shift aimed at streamlining new well approvals and increasing local output."

(Reporting by Nicole Jao in New York; Editing by Nia Williams)

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