Californias oil industry is undergoing a significant transformation, with production declining from 760,000 barrels per day in 2000 to 250,000 barrels per day in 2025. This decline, coupled with the states commitment to reducing carbon emissions, has led to increased reliance on imported oil and refined products, driving up prices and market instability. The states cap-and-trade program, while generating billions for clean energy projects, has been criticized for keeping emissions reduction incentives low. President Trumps executive order challenging Californias cap-and-trade program and plans to expand federal oil and gas leasing have added to the regulatory complexity. The refining sector is also feeling the impact, with the number of operational refineries falling from 20 in 2010 to 12 in 2025, leading to higher and more volatile fuel prices. This shift not only affects California but also poses challenges for Alaska, whose crude oil has historically been primarily sold to California.

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