A gas station in California showing skyrocketing fuel prices as refinery closures loom.
California is bracing for a significant rise in gas prices as two major oil refineries, Phillips 66 in Los Angeles and Valero in Benicia, plan to close by 2026. With a projected decrease in refining capacity by 20%, an analysis suggests prices could soar to $6.43, potentially hitting $8.43 per gallon. This surge could strain California households and industries, worsening ongoing economic challenges. The closures may impact thousands of jobs, raising concerns about the state’s energy independence and long-term fuel pricing amidst rising demand for alternative solutions.
Two major oil refineries in California, Phillips 66 located in Los Angeles and Valero in Benicia, have announced plans to close by 2026. The closures are projected to decrease the state’s refining capacity by approximately 20%, which could lead to significant rises in gas prices throughout California.
According to an analysis conducted by a University of Southern California professor, Michael A. Mische, gas prices could jump to $6.43 per gallon following the first refinery closure and potentially reach as high as $8.43 after both refineries cease operations. This surge in fuel prices would likely put additional financial strain on California households and various industries, including air travel, food delivery, and healthcare.
California’s gas prices are already among the highest in the nation, frequently exceeding the national average by more than a dollar per gallon. Recently, the state’s average gas price was around $4.85 per gallon, exacerbating concerns about the cost of living for working families.
The impending refinery shutdowns are feared to initiate an economic crisis in California, significantly affecting fuel costs. Should California implement stricter fuel standards, allow increases in gasoline taxes, or reauthorize the Cap-and-Trade emissions credit program, consumers could face even higher prices at the pump.
The closures of Phillips 66 and Valero will directly impact approximately 1,300 workers and will also affect an additional 3,000 jobs statewide connected to the refineries. This could add to the state’s unemployment issues if alternative employment is not available for those displaced.
Fuel consumption in California has decreased by around 11% since 2001, signaling a declining demand for gasoline. Despite this decrease, the closing of these refineries raises concerns about supply and stability in the market, which could drive prices even higher.
The ongoing situation has drawn political criticism, particularly from Republican Senate Minority Leader Brian Jones, who contends that the policies of Governor Gavin Newsom have made refinery operations less economically viable in the state. However, Newsom’s office has not responded to inquiries regarding this matter, leaving questions about the state’s energy policies unanswered.
As California prepares for the closures of its major refineries, the state may become increasingly reliant on out-of-state and foreign oil supplies. This shift raises potential concerns regarding national energy security, as the state would depend on external sources for essential fuel supplies.
Legislative measures have been discussed in an attempt to alleviate the high fuel prices currently impacting California. Nevertheless, there exists a persistent tension between state regulators and oil companies over accountability for rising costs, leaving consumers uncertain about the future of gas prices in the state.
As the 2026 deadline approaches, residents of California have much at stake, and the effects of these refinery closures may reverberate through various facets of the economy, prompting calls for urgent action to address the looming crisis.
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