The oil-and-gas industry is sounding the alarm over a tightening of California's cap-and-invest program, warning that stricter emissions caps could drive up gasoline prices and jeopardize the viability of in-state refining.

The California Air Resources Board is advancing amendments to the cap-and-invest framework, a market-based mechanism requiring major emitters to purchase allowances for greenhouse-gas emissions, that would significantly reduce the supply of available credits and accelerate reduction targets through 2030, according to the New York Post. The program, extended through 2045 last year, generates revenue through quarterly auctions that has helped fund state priorities, including the beleaguered high-speed rail initiative.

Andy Walz, president of Chevron's downstream, midstream and chemicals division, told KCRA in an interview this week that the forthcoming board vote on the changes could impose billions in additional costs on fuel producers.

“If they add this burden … it’s not whether refineries will close, it’s when,” the executive said.

Walz pointed to heightened geopolitical risks, including the spiraling U.S.-Iran war, as a reason to pump the brakes on reductions in domestic production capacity.

“That makes no sense when you look at global tensions right now,” Walz said.

Walz described the situation as an “emergency” for the state and highlighted potential national-security implications, noting California hosts 32 U.S. military bases that depend on reliable local fuel supply.

“It’s important to national security to have the fuel those facilities need,” he said. “This isn’t just a California issue.”

A study by Capitol Matrix Consulting estimates the proposal could saddle California refineries with $5.5 billion to $9 billion in added costs over the next decade, a burden that could erase much or all of their projected earnings in some cases.

Projections from industry sources, including Chevron, indicate the amendments could add more than $1 a gallon to gasoline prices by 2030, with the company specifically estimating an increase of $1.21 per gallon if allowance prices reach projected ceilings around $135. California pump prices already average about $1.54 above the national level, according to the Wall Street Journal.

Yet, Newsom has shown little concern about higher costs at the pump for California voters. Instead, the potential 2028 Democrat presidential contender has framed the state's climate policies largely in opposition to President Donald Trump.

“We’re doubling down on our best tool to combat Trump’s assaults on clean air — Cap-and-Invest — by making polluters pay for projects that support our most impacted communities,” Newsom said in September.