Long Beach Faces $301 Million Oil Revenue Loss Amid Push to End Fossil Fuel Dependency

Long Beach, CA – A newly released economic review by Long Beach City Auditor Laura Doud has sounded the alarm over the financial toll the state’s transition away from crude oil and natural gas could take on the city potentially slashing oil-related revenue by up to $301 million by 2035. With no comprehensive replacement strategy in place, the report is raising difficult questions: How will the city fill this looming budget gap? And is California rushing to end oil production without a clear, sustainable financial alternative for local communities?

The report, prepared by petroleum consulting firm Evans & Walker, details a sharp drop in oil revenue—from $56.5 million in 2023 to as low as $21 million by 2035, a 63% decrease. This decline stems from the natural reduction of oil output—about 6% annually—and potentially the passage of Senate Bill 1137 (SB1137), which would ban new or retrofitted oil wells within 3,200 feet of homes, schools, and hospitals. The bill, if approved by voters this November, would further accelerate the city’s oil revenue loss.

Essential Services at Risk

This revenue funds critical services across Long Beach, including:

• $28.7 million for Tidelands: beach patrols, ADA access paths, bluff improvements, and lagoon restoration.
• $23.4 million for the General Fund and Uplands: covering street and park maintenance, libraries, public health programs, and safety services.
• $3.1 million from Proposition H: dedicated to public safety and homelessness outreach.
• $1.3 million: supporting utilities and community development.

City Auditor Laura Doud underscored the significance of this funding, stating, “Oil revenue has a long history in funding services and projects that safeguard the environment, improve infrastructure, enhance beaches, and keep residents safe.”

No Replacement Strategy in Sight?

Despite the enormous impact these projected losses could have on city operations, the report highlights a glaring issue: no alternative revenue stream has yet been identified to offset the decline. As the city braces for reduced oil funding, there is growing concern among residents and policymakers alike about the lack of a transition plan.

What will fill the $301 million gap?

How will Long Beach sustain safety services and environmental protection without oil revenue?

Is the state doing enough to support municipalities bearing the brunt of the transition?

These are the questions facing Long Beach as it grapples with the twin challenge of moving toward environmental sustainability while preserving fiscal stability.

State Support Falls Short

In addition to lost revenue, Long Beach must also contend with the high costs of properly retiring oil wells to prevent environmental hazards. While the city’s share of these “asset retirement obligations” is expected to be fully funded, the State of California—the majority stakeholder in local oil operations—falls short. The state’s contributions to its retirement reserve fund are capped at $2 million per month and are projected to cover only 50% of its total obligation by 2035.

Without changes to this funding model, the city could face further environmental and financial risks tied to the state’s underfunded cleanup liabilities.

With the November vote on SB1137 approaching, Long Beach officials and residents are left in a precarious position. The push to phase out fossil fuels is both urgent and necessary, but critics argue that without a roadmap for local governments like Long Beach, the state may be trading one crisis for another.

Is California moving too fast on oil without a lifeline for cities that depend on it?

What alternatives will be provided to sustain essential services?

And who will be held accountable if the promised green transition leaves cities in financial ruin?

As the transition unfolds, Long Beach is demanding answers—and a plan.