California’s Indispensable Heavy Oil
The moral argument for resuming oil drilling in California is simple: the state still relies on petroleum for fifty percent of its annual energy inputs, and until we can overcome that reliance, we should be producing it here, where it’s subject to the most responsible environmental and labor standards in the world.
This argument holds up from every angle. We create thousands of high paying jobs. We set an example to the world by using the cleanest and most efficient technologies. And over time, when alternative energy technologies mature and begin to clearly outcompete petroleum on price and performance, we then allow market forces to naturally reduce and replace petroleum drilling, refining, and distribution.
But when evaluating the reasons to redevelop California’s oil industry instead of precipitously shutting it down, there is another factor to consider; the difference between light and heavy crude oil. Heavy crude oil is thicker and typically has a higher sulfur content than light crude. California has the largest reserves of heavy oil in the United States – according to some reports we are second only to Venezuela worldwide – and heavy oil is absolutely necessary to the petrochemical industry.
Most American oil refineries, including refineries located in California, cannot run efficiently or produce a full range of petroleum products without blending heavy crude with light crude. Without heavy oil, refineries are not be able to produce jet fuel, diesel fuel, lubricating oil, naphtha (for plastics), paraffin (for many industrial applications), and asphalt.
Some numbers help illustrate U.S. dependence on heavy crude oil. While the United States is a net exporter of overall petroleum products, that is because we export more refined petroleum products than we import. But when the comparison is limited to the subset crude oil, we export 1.5 billion barrels per year of mostly light crude, and we import 2.4 billion barrels per year of mostly heavy crude.
Here in California, more than two-thirds of the oil we produce in-state is heavy crude, but our total in-state production accounts for less than one-quarter of the oil we refine. Estimates vary, but according to the California Energy Commission, California produced 325,000 barrels per day of crude oil from in-state wells in 2024, and imported 1.1 million barrels per day. More than half of the oil that we imported was heavy oil, despite California having some of the biggest reserves of heavy crude in the world.
Opponents of California’s oil industry claim that heavy crude oil has a bigger and potentially more harmful environmental impact than light crude oil. These critics are right, but they’re ignoring reality. As long as we rely on oil, we’re going to need heavy oil. If extracting heavy oil has a bigger environmental impact, that is an even stronger argument to extract it here in California where even if our hyper-regulated environment were relaxed just enough, it would still exceed standards set anywhere else.
Attempts to quantify just how much heavy oil is recoverable in California is not easy. According to Britannica, “California accounts for most of the thermally recovered heavy oil in the United States. The largest of the California heavy oil fields is Midway-Sunset, with an ultimate recovery estimated at more than 3 billion barrels. Almost as large is the Wilmington field [Long Beach], with about 3 billion barrels. The Kern River field, projected to ultimately produce slightly more than 2 billion barrels, and the South Belridge, with slightly less than 2 billion barrels of recoverable heavy oil, are the other top producing fields in the state.”
On the other hand, according to the US Energy Information Administration, California’s proven reserves are only 1.7 billion barrels. That wide range of estimates can partially be explained by the fact that California’s oil companies only report proven reserves if there is a possibility they will acquire a drilling permit. For this reason, they’ve been writing off proven reserves of oil, while the amount of so-called contingent reserves – recoverable if permits were available – is proprietary. But estimates of California’s actual total reserves, including unproven but likely deposits, are much higher.
Taking into account offshore and onshore reserves, a 2014 study by petroleum geologist Tim Considine for the California Policy Center estimated California’s total crude oil reserves at 30 billion barrels. This figure is corroborated by a 2025 report issued by Californians for Energy and Science, an industry group promoting oil and gas development in the state. One thing is certain, California has abundant reserves of crude oil.
California’s regulatory crackdown on its own oil industry is unrelenting. In response, two major refineries have announced they will shut down operations next year. One of them is rumored to be relocating to Vietnam, where they will refine gasoline to California standards and ship it here in tankers at great additional expense to consumers. California’s production has declined from 1.1 million barrels per day in 1985 to 325,000 today, i.e., from near self-sufficiency in oil to near total dependence on imported oil. But consumption hasn’t fallen nearly as much; from 1.7 million barrels per day in 1985 to 1.4 million barrels per day in 2024.
The economic consequences are obvious. Not only do we deprive ourselves of thousands of high paying jobs in the oil industry, we also deprive businesses and households of affordable fuel. Both of these consequences have multiplier effects. People without good jobs don’t support other businesses. High fuel prices increase shipping costs, affecting all products. The biggest victims are family-owned small businesses and low-income households. Is this environmental justice?
The environmental benefits of offshoring our oil drilling are negligible, if not negative. The cold-hearted upside, apparently, is that we are willing to impoverish our population with high gasoline prices so they will drive less. The downside? Tankers carrying crude oil, and now even gasoline, polluting their way across the Pacific Ocean to supply our post-industrial state. Oil drilling in nations with no environmental standards whatsoever. With any disruption in supplies from the far-flung sources, we will be immobilized. Is this rational policy?
Without major changes, California’s state legislature, the governor, and the regulatory agencies are taking an awful risk.
Edward Ring is the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, National Review, City Journal, and other media outlets.