Swansenreport

• Declining in-state oil production — Stemming from regulatory restrictions on new drilling permits in California, which reduced the volume of crude available for transport.
• Shift in crude flows — More oil was diverted southward to Los Angeles-area refineries (which had higher remaining capacity), where shipping tariffs were lower.
• Refinery closures — The impending shutdown of the Valero Benicia refinery further reduced demand for northern deliveries.
• Fixed operating costs — Pipelines require a minimum volume (around 60,000–65,000 barrels per day) to operate efficiently and cover expenses; low volumes made operations unsustainable.

Crimson repeatedly sought rate increases from the California Public Utilities Commission (CPUC) to offset losses, including emergency requests for hikes up to 59% and temporary tariffs. While some southern pipeline rate adjustments were approved, relief for the northern SPB segment was insufficient or delayed.Timeline and ShutdownWarnings of a potential shutdown emerged in September 2025, with Crimson indicating closure could occur by fall 2025 without relief. Despite efforts, including legislative measures like SB 237 (allowing up to 2,000 new wells annually in Kern County to boost production), volumes did not recover meaningfully.The pipeline shut down permanently on December 15, 2025, ceasing operations as the final day of transport.Impacts and ConsequencesThe shutdown severed the primary (and effectively only remaining major) pipeline link for delivering Kern County crude to Northern California refineries. Consequences include:

• Increased reliance on imports → Bay Area refineries (like PBF Martinez) must source more crude via ocean tankers from foreign suppliers, raising costs and California’s dependence on imported oil (already over 60% of supply).
• Potential transport shifts → Some crude may move by truck or rail, increasing emissions, traffic, and safety risks.
• Higher fuel prices → Analysts and industry groups warned of upward pressure on gasoline and diesel prices in Northern California, exacerbating the state’s already high costs amid ongoing refinery transitions.
• Broader energy security concerns → Critics, including lawmakers and industry associations, highlighted risks to supply stability, potential shortages, and even impacts on military fuel supplies (e.g., jet fuel).

The event reflects broader challenges in California’s oil infrastructure: declining production, regulatory hurdles, and the transition away from fossil fuels, which have led to underutilized pipelines and refineries despite efforts to stabilize supply through measures like increased Kern County permitting.