Iran war exposes weakness of California’s ‘green’ dependence on foreign oil

California is a beacon for smart people. Yet we seem to excel in producing policies that hurt ourselves. 

This is particularly clear in the present energy crisis. The showdown in the Strait of Hormuz has raised oil prices worldwide, but it is also unmasking the sheer idiocy of California’s current energy regime.

For more than a decade, California has been waging war on its own fossil fuel industry. Once, the Golden State was a major energy exporter. But regulators, steeped in green religion, have decided that we will eventually drive electric vehicles — and that we will fill our tanks with gas imported from somewhere else in the meantime.

As a result, California is the only state in the Lower 48 that relies on oil and refined petroleum from other parts of the world. Previously, much came from Russia, but now it comes largely from the Persian Gulf.

Oops. 

California is now on the hook to a part of the world that is well known for fanatical anti-Americanism and piratical regimes. 

That we pay a premium is obvious, as we have no pipelines from the Middle East, or even from Texas. Our chosen reliance on green energy also has made the state the nation’s largest importer of electricity, and one of the few states that is a net importer of oil and gas.

Once, California accounted for 40% of US oil production. It now accounts for a mere 2% of US oil output, and relies uniquely on foreign supplies for its own needs, including for refined petroleum.

Meanwhile, other parts of the country are getting richer with the price increases. Ships diverted from the Persian Gulf are now headed to the Gulf of Mexico (“Gulf of America,” in Trumpian), but not to the ports of Los Angeles or Oakland. 

“North America is now an energy superpower,” suggests industry analyst Robert Bryce. “But California is just screwed in so many ways.”

So amid rising oil prices, we are making sure Bakersfield and Long Beach are not adding to our coffers. 

It’s boom times again in the Permian Basin, but no celebrations in the former energy-producing parts of California.

All of this has been in service to an ideology that somehow thinks products made using coal (largely from China) are OK, but those made with American — or, even better, California crude — are somewhat evil. We tried to eliminate the demons of oil and gas, well before these fuels are anywhere near losing their importance. 

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The results of this policy have been disastrous, for both industry and consumers. California gas prices are now around $6 per gallon or higher, 40% above the national average. UC Davis economists expect California will soon be paying $2.50 more per gallon than the average American.

Gov. Gavin Newsom likes to blame President Trump — who else? — and the evil oil companies for the high prices. But more than half the price differences come from state regulations. The state excise tax on gas is the highest in the nation — even as many states have reduced such fees. 

In the future, suggests energy analyst Ron Stein, California will be largely dependent on new refineries in Africa, Asia and the Middle East, a brilliant move in a world that is shaken by instability. 

The impact of California’s high energy prices reverberates across the economy. They have played a critical role in depressing local industry and reducing blue-collar jobs, which often pay better today than those in the service sector.

The biggest losers here are the very groups, notably Latinos, who are disproportionately connected with what a recent Chapman University report describes as “the carbon economy.” That economy includes such things as manufacturing, logistics, agriculture, construction, and energy production.

Latinos make up well over 90% of agricultural workers; over 50% of all California construction workers; the vast majority of factory workers; and roughly 30% of workers in oil and gas. Construction activities often involve the use of heavy machinery and materials with high carbon footprints, while transportation relies heavily on fossil fuels. 

Yet the massively important contributions of Latino workers are often myopically labeled as mere “carbon emissions” by California’s environmental apparat.

California’s high energy prices also place a disproportionate burden on poorer residents, particularly in the far less temperate interior counties. Environmental groups are in the forefront of trying to limit or eliminate natural gas, which is far cheaper and much more reliable than renewables.

Another potential victim group here may be the tech oligarchs. They have often funded green groups, as they saw their industry as not being particularly vulnerable to high electricity prices. But now, with the rise of AI, they desperately need more juice.

That means, increasingly, that tech firms need to locate closer to data centers. Yet these have little chance of being built here, given California’s regulatory and political environment.

Ultimately California has been digging itself a deep hole on energy for decades. 

With the crisis in the Persian Gulf, and perhaps the Red Sea as well, Californians can look forward not only to super-high prices, but also possible shortages, particularly in the summer. 

Good job, Sacramento. 

Joel Kotkin is the presidential fellow in urban futures at Chapman University and executive director of the Urban Reform Institute.