Pat McDonald, a leading executive in the oil sector, has raised concerns that gas prices in California are likely to keep climbing unless Governor Gavin Newsom takes steps to “encourage” local producers to ramp up output.
The CEO of Carbon Energy Corporation, which manages some of California’s oldest oil wells, stated to the California Post, “Diesel might hit $10, while gasoline could reach $8.50.”
Given the state’s reliance on foreign oil and the uncertainty surrounding when the Strait of Hormuz will reopen, McDonald emphasized that “the clock is ticking.” He urged Newsom to sign an executive order that could alleviate restrictive regulations hindering growth in the industry.
“The governor has the power to issue executive orders to manage this crisis in the short term, but lawmakers must realize that the policies they’ve put in place are detrimental to Californians,” he remarked.
The average gas price in California stands at $6.16, which is significantly higher—over $1.50—than the national average according to AAA.
Despite Newsom’s frequent attribution of rising fuel costs to factors such as President Trump’s policies and the conflict with Iran, Gas Buddy reports that gas prices in California haven’t dipped below $4 in the past five years.
And it might not end there. The last ship carrying foreign crude oil through the Strait of Hormuz reached California just recently, and this state sources around 30% of its foreign oil from the Persian Gulf.
Currently, hundreds of vessels are stranded as President Trump halts Project Freedom while negotiating with Iran, complicating the situation further.
McDonald pointed out that California’s heavy dependence on foreign oil, combined with significant cuts in refinery capacities and local production due to tax and regulatory frameworks, poses alarming challenges for policymakers.
While McDonald isn’t advocating for the outright repeal of regulations such as SB 1137—which restricts new oil and gas well construction near sensitive areas—he does suggest that relaxing these rules could help revitalize the industry.
“If regulations were less disruptive and easier to comply with, I think that in about nine months to a year, California-based producers could significantly boost oil and gas output,” he mentioned, speculating that easing up on SB 1137 could raise production by 30 to 40 percent.
He expressed confidence that other companies in the oil and gas sector are in a similar situation and could “begin immediately” if the regulatory environment changes.
“Capital seeks out certainty,” he noted, emphasizing the need for a stable investment landscape devoid of unpredictable regulations that might not reflect the actual situation on the ground.
