California’s Oil and Gas Crisis: From Military Threat to Mass Starvation

Just yesterday, the California Globe posted a report on Executive Orders for the President’s consideration. These executive orders relate directly to the need for the President to invoke the Defense Production Act for California crude oil production, along with the dying refinery industry. This report was written by USC Professor Mische in collaboration with his colleagues, UC Berkeley Professor James Rector and U.S. Oil and Gas Association President Tim Stewart.

In the concluding paragraph of the team’s report, Professor Mische states: “President Trump can fix the California energy debacle. Invocation of these Executive Orders would have an immediate and positive effect on stabilizing the California fuels markets, while providing high levels of certainty and assurance that California crude oil producers and refinery operators could support U.S. force readiness and the security of the U.S.”

While this paragraph is quite accurate about the executive orders’ effect on the markets, refineries, and force readiness, it does not tell the full story of the potentially dire situation that we are currently in and the potentially deadly situation that we might be facing.

To understand this, we need to go back to September of 2025, when I first met Assemblyman Stan Ellis from Bakersfield. Stan convened a meeting with both me and Professor Mische at his office in Bakersfield. The purpose of the meeting was to discuss the impending energy crisis in California. Together, we have over 120 years of experience in the crude oil production and refining industries. As we began our discussions, our collective experiences made us conclude that the looming crisis was far worse than any of us had thought individually.

From this meeting, our first paper, “CALIFORNIA ENERGY AND FUEL POLICIES: A CLEAR AND PRESENT THREAT TO NATIONAL SECURITY AND FORCE READINESS,” was written. In this 10-page report, which was published in Washington, D.C., on October 21 of 2025, we clearly outlined the problems, their causes, and the potential effect that it would have on both California and force readiness. On page ten, we offered immediate steps that the President could take to fix the problem:

“The most direct method may be for POTUS to declare California oil production pipelines, terminals, ports, refineries, and all related infrastructure as essential assets and invoke the Defense Production Act (DPA) as provided under DPA Titles I and III, and DoD (now DOW) Directive 3020.40. This would have the effect of allowing POTUS to preserve and protect California oil production and refining assets essential to national defense. Secondly, POTUS may be able to avail himself of the National Emergencies Act to provide temporary relief to California producers, operators, and refiners. Finally, as a critical and essential national security asset, POTUS may have constitutional powers for protecting California gasoline production and other petroleum assets, potentially through operation of the Supremacy Clause of the U.S. Constitution.”

Then, at the end of page ten, we wrote this dire warning regarding the urgent need for Presidential intervention:

“California, and the nation, can ill afford a self-engineered and created California gasoline and aviation fuel crisis. Both economic and national security interests are profoundly influenced and, sadly, compromised by California political sentiment and legislative actions related to refinery operations and oil production. The need for action is now, and the potential for a crisis caused by California’s selfish policies creating a contagion effect on U.S. force readiness is imminent. It’s time for Presidential intervention and national oversight.”

With the imminent closure of the Phillips Wilmington Refinery and Valero in Benicia, Chevron CEO Andy Walz stated the following just two weeks later: 

“That means we lose another 20% of gasoline that people need to get to work, to get to school, to do the things they need to do. And that means prices are going to go up and it’s going to be less reliable.”                                                            

“I THINK WE ARE IN THAT CRISIS MODE.”     

“Chevron has been here for 145 years. We would like to stay. We haven’t made any decisions to stay or go yet. But we need real sustainable, durable changes to the way the state works.”

So, back on September 5th, we clearly see Andy Walz very concerned about gasoline prices and the state’s ability to import more fuel with the closure of Phillips 66 and Valero. AND at that time, he stated that we were already in a crisis.

On October 17th, Phillips finally shut down. Imports increased to approximately 30%. At that point, we did not see substantial increases in our fuel costs in the state. This was an indication that our infrastructure was still able to offload the incoming fuel shipments. While we had not yet seen an effect, both my colleagues and I were getting very concerned that Valero’s closure would exceed our ability to offload fuel into the state.

We then received word that in mid-October, Valero cancelled their crude oil contracts for the Benicia refinery. In discussion with Professor Mische and Assemblyman Ellis, we determined that Valero would probably shut down in January instead of April as they had previously announced. On January 31st, 2026, Valero pulled feed from their crude unit. Two days later, Professor Mische received thermal imaging reports that the refinery was cold. They were completely down.

At this point, imports of gasoline, jet fuel, and diesel increased to nearly 42%. By the end of that week, prices started to climb. By the time the Iranian war started, prices in Northern California had increased between 70–90 cents per gallon. Diesel fuel specifically saw even sharper increases. This was a clear indication that we had exceeded our infrastructure’s ability to keep up with the import demand.

Now California has, through its own policies, placed itself in a very dangerous position. I specifically wrote about this in my “Point of No Return” document, referring to things that could significantly impact the state if it got into this position. Some of these included unscheduled refinery downtime, storms affecting shipping, and global events such as the current Iranian War. While the blockage of the Strait of Hormuz does not directly affect California, it affects every refinery in Asia. Those refineries are supplying nearly ALL of California’s imported fuel. All of these refineries have been forced to cut crude oil rates and have suspended all exports of fuel, including those coming to the state.

Since 2023, California’s policies have resulted in a loss of 700,000 barrels per day, or 35% of refining capacity. Now we find ourselves approaching and passing record price increases and the real possibility of statewide shortages. If these refineries had not shut down, then we would not be facing this crisis.

Earlier in this report, I quoted Chevron CEO Andy Walz stating that the State of California needed to work with the refineries:

“But we need real sustainable, durable changes to the way the state works.”

Instead of working with refiners, the state has drastically increased fees that they will have to pay due to new Cap-and-Invest amendments: $500 million for Chevron and nearly $400 million for PBF. These outrageous increases resulted in three letters dispatched to the state from Chevron, PBF, and the Marathon Corporation. In these letters, the corporations are all stating that if the state refuses to sit down and negotiate these egregious Cap-and-Invest rate increases, then they will likely shut down their refineries and leave the state.

Combined, these corporations own six of the seven remaining refineries in the state. If these refineries all shut down, then we will lose the following:

• 24 million gallons per day of gasoline
• 8 million gallons per day of jet fuel
• 14 million gallons per day of diesel

These losses will result in a total economic collapse. We will experience unprecedented shortages on the entire West Coast. No jet fuel for our airports. All of our military will be grounded. No diesel fuel for transportation. The ports of Los Angeles, Long Beach, and Oakland will be inoperable. All metropolitan cities, which typically only have 3–5 days of food supply on hand, will quickly run out of food. Thousands of people could literally starve. And thousands of people could literally die.

The three letters written by the three corporations are unprecedented in history. CEO Andy Walz warned about it back on September 5th. He is fully aware of these impacts. Mr. Walz, along with the other CEOs, know what will happen to California if they shut down and leave. For the first time in history, California, along with the entire western United States, will be defenseless. This, in turn, can put all of America at risk—all due to California’s failed policies. The state government has no regard for the military or the citizens of California. Their track record, including their current response to the letters, is a clear indication that federal intervention is the only viable solution. 

Our report from seven months ago was very clear in this regard. Now, it is imperative. The Defense Production Act needs to be invoked immediately. No more excuses, no more delays! In addition to invoking the Defense Production Act, the President needs to seriously consider all of the Executive Orders that have been submitted by Professor Mische and his colleagues. They should be signed and implemented at the earliest opportunity.