California’s biggest inland oil pipeline may shut down this fall, and the ripple effects could be serious. Crimson Midstream’s San Pablo Bay Pipeline, which moves crude from Bakersfield to Bay Area refineries, is bleeding money, about $2 million a month. The operator is asking for a 37% rate hike and other emergency measures to stay afloat.

Why the crisis? A drop in Central Valley oil production and a shift in supply routes toward Southern California have left the pipeline underused. Crude pipelines require steady volumes to stay cost-effective. When flows dip below minimum thresholds, estimated around 60,000 barrels per day, operating costs soar. Crimson’s CEO says the pipeline is already well below that mark.

If the pipeline shuts down, at least two major Bay Area refineries, Valero’s Benicia plant and PBF Energy’s Martinez facility, would lose a key supply route. Together, these facilities make up about 20% of California’s refining capacity. Without the pipeline, they would have to import more oil by sea or rely on trucks, up to 15,000 barrels a day worth, which raises both logistical and environmental concerns.

California’s oil output has declined by over 70% in the past 40 years due to aging fields, cheaper competition, and tough environmental regulations. While the state is trying to speed up inland drilling permits, it is also clamping down on offshore production, leaving fewer options on the table.

The fate of the San Pablo Bay Pipeline could become a flashpoint in California’s ongoing balancing act between energy needs and environmental policy. For now, the clock is ticking, and without fast intervention, a critical piece of the state’s fuel infrastructure could go dark.