Trump’s Executive Order on Offshore Drilling in California

On Friday, President Trump signed an executive order aimed at resuming offshore drilling in California. However, it’s unlikely that this will lead to lower gas prices anytime soon.

The administration invoked emergency powers through the Defense Production Act to reopen the Santa Ynez offshore platform and associated pipeline near Santa Barbara, which is under the management of Sable Offshore.

Sable has informed local fire officials that they plan to “restart pumping within 24 hours.” Yet, Steve Borenstein, who teaches energy at UC Berkeley’s Haas School of Business, told CBS News that this will not have any immediate effect on oil supplies.

“Not in the near future, because these things will be fought in court,” Borenstein mentioned. “There’s going to be a lot of lawsuits coming up.”

Back in 2015, a pipeline incident led to California’s most significant oil spill, which has since prevented Sable from restarting its operations.

California Governor Gavin Newsom has pledged to challenge the federal administration over this decision.

Borenstein further explained that while offshore drilling may not reduce oil prices, it could generate some jobs. “It will create jobs because oil companies will have more profits and there will be more jobs in the oil sector,” he noted.

The Trump administration also plans to tap into strategic oil reserves, which will release 172 million barrels starting next week.

However, Peter Reidel, founder of Yorktown Partners LLC, commented that the move may not bring substantial relief. “Oil is a global commodity. Even if we release 100 million barrels a day, the immediate impact will likely be minimal,” he pointed out, emphasizing that it takes time for oil to navigate the supply chain.

“We can’t just turn it on tomorrow. It’s going to take some time to get it out and then we’ll have to refine it,” Reidel explained. “It will probably be at least two weeks before you see changes.”

Currently, crude oil prices are around $100 per barrel. Futures markets have surged following Trump’s announcement regarding an attack on Kharg Island, a critical oil hub for Iran, which handles about 90% of its crude oil exports.

“To get oil back to $3.50, it has to drop below $83,” Reidel added.

He also mentioned that California’s stringent regulatory framework is exacerbating the price increases, placing the state in a worse situation compared to others due to its reliance on foreign oil.

Patrick MacDonald, CEO of Carbon Energy Corporation, stressed that easing permitting restrictions for new wells would significantly benefit California’s oil and gas industry. He highlighted that there are currently 100 more oil wells off-limits due to various regulatory measures.

Senate Bill 1137 creates a health protection zone around sensitive areas like homes and hospitals, but McDonald suggested that it effectively halts all drilling activities.

He argued that if these restrictions are lifted, oil and gas production could potentially double. This is already being tested in Kern County through Senate Bill 237, which allows the county to issue its own drilling permits.

“Kern County is more receptive to how the industry operates,” McDonald said, expressing hope that this approach spreads to Ventura County as well.

While he is optimistic about changes in Kern County, McDonald acknowledged that we shouldn’t expect any immediate relief for drivers at the pumps.

For now, it seems we will have to wait a bit longer to see any significant changes in fuel prices.