Many mornings, just before 7 a.m., a large tanker truck pulls up to the grand gates of Oprah Winfrey’s 40-acre estate in Montecito, California. Inside is neither merchandise nor produce – just water.

A year ago, Oprah’s annual bill from the Montecito Water District was just shy of $125,000. This year, it is less than half. Like many in this wealthy enclave, Oprah has cut back on her consumption of district water. That said, her property has its own wells and a small lake and, according to neighbors, there are the trucks.

These days, tankers can be seen barreling down Montecito’s narrow country roads day and night, ferrying up to 5,000 gallons of H20 to some of the world’s richest and thirstiest folks.

As California trudges into its third year of a statewide drought—currently at an alarming Stage 4 level, denoting what the federal government calls “exceptional drought” conditions—few towns have been as hard hit as Montecito.

But the plight of this unincorporated community offers ironies—and political lessons—that are as rich as many of its 13,500 residents. The wealthiest ‘burb of Santa Barbara county, and indeed one of the wealthiest enclaves in the United States, Montecito is home to Google’s Eric Schmidt, Warren Buffett’s partner Charlie Munger, entertainment mogul Tom Freston, director Ivan Reitman, and stars Ellen DeGeneres, Dennis Miller, Julia Louis-Dreyfus and Rob Lowe with George Lucas and Kevin Costner owning adjacent beachfront homes. Or, as one local realtor puts it, “just about everyone in the industry.”

Though gifted with green hills and splendid ocean views, Montecito has the geologic misfortune to have been built on land with precious little water—indeed, less water than any other part of the central coast of California. An aquifer runs nine miles under southern Santa Barbara County, but only a tiny sliver extends into Montecito.

Last November, Tom Mosby, general manager of the Montecito Water District, warned that without drastic and immediate conservation—a 30 percent use reduction by all—the town would be plum out of water.

And then things got worse. In January, there was no rain. In February, Mosby announced that Montecito would begin rationing water. Part of the moratorium: a stop to the building of new homes—and heavens!— no new swimming pools. Residents with existing pools or spas were forbidden to empty and refill them with town water.

For the most part, residents have embraced the restrictions, allowing Montecito to cut its water usage by 48 percent and leaving vast aprons of yellowed lawns as evidence. A second five-acre property owned by Oprah—across the street from her estate—has gone to seed. Though a former water hog, Oprah is no longer. “She is the poster child for us,” gushed Mosby in an interview. “She’s doing her part.”

Some folks, however, seem not to have gotten the message.

In May, 837 defiant—or careless—residents coughed up $532,000 in penalties, or a collective overage of about 13 million gallons of town water. The beachfront Biltmore Four Seasons was whacked with a penalty of $48,000 for using about one million gallons over its allotment in April, while a nearby private home sucked up a $30,000 fine for the month for guzzling an extra 750,000 gallons. The district receives about 30 appeals a week. Those who do not pay their bills receive shut off notices— and about 400 were sent out in the last year. The Montecito Water District, which is particularly discreet about its patrons, admits it will rake in close to $4 million in fines this year.

Ty Warner, the Beanie Babies tycoon and owner of the Four Seasons Biltmore Hotel and the San Ysidro Ranch (where John F. Kennedy and Jackie were married), and whose private residence is a stunning six acres facing the Pacific) is a perennial on the water district’s top-ten users list. According to public documents, the biggest residential user for 2012-13 was Pat Nesbitt—CEO of Windsor Capital, majority owner of Embassy Suites—who has long sought to convince local officials that his polo field, which is part of his 20 acre estate, is entitled to a discounted agricultural water rate. And he’s sued the Montecito Water District—twice, according to the water district’s attorney—to make his case.

Some simply find a way around the restrictions. Bob Hazard, a retired hotel CEO who writes a news column for the Montecito Journal, says he would not be surprised if some of the town’s wealthiest are “paying as much as $15,000 a month for trucked-in water.”

Certainly, Montecito has more than its share of water hogs. The top three users for Montecito in 2012/13 guzzled close to 30 million gallons alone. “That’s enough water to provide the needs of a small town,” says Mosby. And this, during a drought has been unrelenting for almost three years, afflicting the state from Sacramento to San Diego.

So how did the nation’s most populous state, the world’s 8th largest economy, get itself into such a mess?

The saga begins with the fact that much of California is a desert or semi-desert. The only outside source for the state comes from the Colorado River, a siphon created in the 1920s that has long embittered other Western states. Irrigating a desert is no small feat and has prompted all manner of chicanery and backroom deals, as immortalized in the film Chinatown.

Nor does it help that the state is burdened by a chaotic system of 440 water districts or agencies. The county of Santa Barbara, population 250,000, has 12 water boards. Compare that to New York City, population 8.5 million, which has one. Hence, any proposed water solutions or legislation in California can devolve into fractious bickering from competing interests.

Matters for Santa Barbara took a very pricey turn in the 1990s. In 1991, during another difficult drought, the county’s voters were persuaded to participate in the State Water Project – a statewide aqueduct system that was billed as a permanent remedy for droughts. Voters believed that the pipeline, which was designed to ferry water 144 miles from Kern County to Santa Barbara, would cost $270 million but the total bill, including interest through 2035, is $1.76 billion, according to the Central Coast Water Authority. This year, however, when water was critically needed, it arrived by the teaspoon. In January, the Department of Water Resources announced that there would be zero water from the state water project for the entire state. Never mind that Santa Barbara had already paid its $60 million for its 2014 annual share.

Then there is Big Ag. Agriculture sucks up about 85 percent of California’s surface water from rain or snow pack, not to mention the lion’s share of groundwater from wells, at discounted prices. Although the industry generates less than 3 percent of the revenue in the state, it nevertheless casts a mighty shadow over Sacramento.

Consider, for example, almonds: a tasty nut but a thirsty one. While hugely profitable for its growers, almonds drink up 7.2 percent of the state’s surface water. That’s enough water to keep all of Los Angeles and San Diego – or 75 percent of California’s population – fully washed and slaked. But a backroom deal in 1994, asserts Carolee Krieger, president of the California Water Impact Network, re-directed water that was slated for urban areas to a few agriculture interests and growers. Big Ag views the matter another way, arguing that its contribution to the nation’s breadbasket—and the thousands of jobs it generates—is no small deal. While almonds are fierce water suckers, pistachios and pomegranates are also thirsty—more so than, say cotton, a predecessor crop that is less profitable.

California is also one of the few Western states that does not regulate its groundwater. In fact, water rights in the Golden State pre-date the founding of towns and cities — even statehood in 1850. Folks would stake a claim for water rights, build a well, then a town, then a city. And while necessary for life itself, water rights, like gun rights in Texas, have been regarded as sacrosanct.

Few understand that wells, in any particular region, draw from the same underground aquifers. So, when the Santa Barbara Polo Club in Carpinteria, next door to Montecito, waters its 30 acres of emerald-green sod every day from its private wells, it is depleting the very same aquifer that provides for the town’s 14,000 residents and agriculture. Santa Barbara County also has 25 golf courses, each of which requires 300,000 gallons of water a day on average.

This has raised the thorny question of whether a rich man’s polo field or a golf course is more deserving than someone’s right to shower.

As the law stands today, wells are simply private property controlled by whoever owns them – be it a resident, farmer, rancher or polo player. That may change, however, as a few emboldened lawmakers have seized upon the crisis to press for a measure to regulate groundwater. A bill snaking its way through the state legislature, proposed by Assemblyman Roger Dickinson, and backed by Gov. Jerry Brown, would require that every municipality prepare regulations for its groundwater use by 2017 and implement those measures by 2020. At present, no even knows how many wells there are in the state—whether one million or two million—or who’s using them. The bill is expected to come to a vote next week. “In every crisis,” says Dickinson, who is cautiously optimistic, “there’s an opportunity.”

At Pierre’s, an outdoor café in Montecito’s upper village, there is talk of little else. One prominent Montecito lawyer—after paying a $1,500 water fine—admits he has been taking his wash to the laundromat while his family has been showering at the Montecito Y.

Since rationing began, Montecitans have been lining up for permits to dig their own wells. Adam Simmons, a local hydro-geologist who builds wells, said some folks will have to wait 1 ½ years for a well that can cost as much as $100,000. At best, however, wells are an iffy proposition. One homeowner drilled 750 feet down—and found not a drop. Simmons said he was not surprised. A 60-acre avocado orchard/estate was watered by four wells until this year—when all four dried up –leaving the trees to slowly but inexorably die off.

There have been many claims—and some instances—of outright stealing from near-dehydrated reservoirs and spigots. More often than not, however, the water is bought and trucked in from farmers and ranchers of neighboring Carpinteria or Goleta, who have discovered a tidy profit in the crisis.

Last month, Charles Hamilton, the general manager of the Carpinteria Water District, came upon a water truck pulling out of a flower nursery. With talk of “water pirates” stealing from hydrants, lakes and agricultural wells, Hamilton said he decided to investigate.

He followed the truck some five miles, arriving at Montecito’s Birnam Wood Golf Club, a pricey gated community of about 135 high-end homes and a famous Robert Trent Jones-designed golf course. Hamilton confronted the driver, who as it turned out, had bought his payload. (Hazard, the Montecito Journal columnist, estimates that “about 1/3 of Birnam Wood is buying water,” adding, “it’s just about the same for all of Montecito.”)

Hamilton is worried. Carpinteria, one of the country’s top producers of avocados and flowers, is an agricultural wonderland for good reason. The town sits on an immense aquifer that Hamilton describes as a “geological treasure,” amply providing for its residents and thousands of acres of agriculture.

Every well in Carpinteria, however, draws upon its aquifer — like so many straws in a glass. If water continues to be siphoned from these wells to cash in on Montecito’s plight — and if the winter rains do not come — Hamilton frets that even its great aquifer will be threatened.

Matters are so grim that Santa Barbara officials are now leaning toward re-commissioning the costly desalination plant that they mothballed, believing that the State Water Project would solve all their water ills.

Tom Mosby and the Montecito Water Board are now convinced that the only way out of their water woes is to have their own desalination plant. “That is the one option out there for us to become drought-proof,” says a weary Mosby. “A desal plant with local control.”

“Look, Israel was a bona fide desert,” argues Hazard, who has been pushing for desalination. “Now they run the whole country on four desal plants.”

Even if Montecito charged ahead with plans to build a plan, relief would still be a long way off: An operational desal plant would take at least two years to complete.

Until then, some of the town’s rich and famous will continue showering at the Montecito Y.