The Trump administration is planning to open federal waters off the coast of California to offshore oil drilling. The plan, reported by The Washington Post, is part of the administration’s push for increased oil and gas exploration, but it faces local opposition and a global oil market unfavorable to industry expansion.
State waters stretch between three and nine nautical miles offshore before turning into federal waters, which reach 200 nautical miles into the ocean. The New York Times reported that the federal waters near California proposed for offshore oil drilling are along the shore of Santa Barbara County, where some drilling already takes place.
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Neither the White House nor the Interior Department has responded publicly to the news, which appears to be based on anonymous sources within the administration. The last lease sale for offshore oil drilling in California occurred in the 1980s.
Last week, the Bureau of Ocean Energy Management announced 30 new offshore oil leases in the Gulf of Mexico and six in Alaska’s Cook Inlet. The first leases in the Gulf will be available in December.
While unveiling the leasing schedule, Interior Secretary Doug Burgum said expanded offshore drilling “strengthens American Energy Dominance, creates good-paying jobs and ensures we continue to responsibly develop our offshore resources.”
The lease offerings come as the U.S. oil industry has been shedding jobs, and low global oil prices have impacted its balance sheets. Even with more opportunities to lease, experts in energy economics don’t believe the oil industry will rush to drill more oil.
Will the oil industry want to access California waters?
“It’s economics that is holding back production,” said Lucas Davis, a professor at the Haas School of Business at the University of California, Berkeley.
Global oil prices are currently in the low $60-per-barrel range. At that price point, 71% of large U.S. oil companies said they would have to decrease oil production, not expand it, according to a Dallas Fed survey. To expand production, most oil companies want to see prices around $75 per barrel.
However, Davis told Straight Arrow News that market conditions could change if the economy picks up and oil demand rises, or if some supply sources currently flooding the market dry up.
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It’s been over 40 years since the last lease sale for offshore oil drilling in California took place.
In a June letter to the Bureau of Ocean Energy Management, a consortium of industry groups led by the American Petroleum Institute pressed for expanded offshore leasing not only in California, the Gulf Coast and Alaska, but also along the coast of Florida and in the Atlantic.
The letter said all areas on the outer continental shelf with “potential to generate jobs, new revenue, and additional production to advance America’s energy dominance should be considered.”
Davis said that although right now the economics do not pencil out for expanded production, the industry wants options for the future if market conditions change. “Access to more areas means there’s more opportunities,” he said.
“The industry is reflexively always on the lookout for more lease sales,” said John Quigley, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania.
Expanded leasing in the Gulf of Mexico is likely to see a stronger response from the industry because more infrastructure already exists there. In California, where a lease sale hasn’t occurred in about 40 years and production costs will be higher, Quigley said, “there doesn’t appear to be any economic rationale to explore uncharted waters.”
How are California officials responding?
In response to news of the Trump administration’s plans, California Gov. Gavin Newsom wrote, “Dead on arrival,” in a social media post. The news broke while Newsom was in Brazil attending COP30, the United Nations climate change conference.
Earlier this year, California Attorney General Rob Bonta signed a letter with attorneys general from nine other states urging the Trump administration not to open offshore leasing in the Atlantic or Pacific oceans.
“We are calling on the federal government to consider the environmental and public health risks of offshore oil and gas drilling and protect our coastal communities,” Bonta said in a press release.
The path for California to resist offshore oil leasing is unclear because federal waters of the outer continental shelf are outside state jurisdiction.
Although their options may be limited, Quigley said he expects governors of coastal states to push back because of the significant risk of pollution. He added that plans to offer drilling leases in the Arctic jeopardize “irreplaceable habitat” and “would absolutely violate the rights of Native Americans.”
