California News Pulse October 2022

Posted: December 7, 2022

California | October 2022

Field Overview

California, with both onshore and offshore oil production, has been supplying the U.S. with petroleum products since the 19th century. Operations are primarily focused around Kern County, the LA Basin, and the San Joaquin Valley, with the Midway-Sunset oil field in Kern County being the state’s largest.

State Drilling Statistics
Total Rigs in California- 6 (-1)
Total Rigs in United States- 784 (+15)
Total U.S. Rigs 38% YTD

State Permitting Data
Permits Approved – 19

State Highlights

California might levy a new tax on oil companies

Thanks to high state taxes, higher standard for fuel blends, and being on an oil island, California consistently has the highest gas prices in the country. Much of the blame lies on the heightened oil price due to overseas events such as the Russian invasion of Ukraine. However, Governor Newsom likes to blame oil companies for artificially increasing the cost of gas to rake in record profits. His solution? A windfall tax on oil companies which would be used to hand over checks to car owners in an attempt to help offset the rising cost of gasoline. According to David Brunori, an expert on state-level tax policy, no state has successfully introduced a windfall tax. Policy makers are skeptical the tax will make its way through the courts, and others are skeptical it would work even if it did.

Oil And Gas Deals Accelerate As Shell, ExxonMobil Exit California

Once an oil and gas hub, California is now seeing company after company leave the state to pursue business in more industry friendly ones. Enverus, an energy intelligence and analytics firm, noted that while oil companies are making tons of money because of high oil prices, they aren’t using profits in mergers and acquisitions. All the money is going towards paying off debts and is being returned to shareholders. Despite this major oil companies Shell and Exxon are both leaving California, likely due to increased government making it difficult to operate.