California Gas Crisis: Refinery Closures Raise Concerns

News Summary

California faces a gas crisis as two major oil refineries, Valero Benicia and Phillips 66, plan to close. These closures threaten to reduce the state’s gas supply by up to 20%, potentially driving prices up by 75%. As gas prices soar, state officials are alarmed by the economic implications and supply concerns, while Governor Newsom’s administration seeks to address the situation amid stringent regulations and rising fuel costs.

California lawmakers are raising alarms over a worsening gas crisis as two significant oil refineries have announced plans to close. The Valero Benicia Refinery, located in the Bay Area, is set to cease operations in April 2026, while the Phillips 66 refinery in Southern California is expected to shut down within the next year. These closures threaten to reduce the state’s gas supply by up to 20%, potentially leading to a dramatic increase in fuel prices.

Currently, gas prices in areas like Walnut Creek hover just under $5 per gallon, but for some drivers, the cost to fill their tanks has surpassed $100. With the refinery closures looming, experts predict that California’s gas prices could inflate by 75%, possibly exceeding $8 per gallon by the next year. Such a spike would place an additional financial burden on residents already navigating high living costs.

California’s state officials have expressed concerns over these refinery closures, especially since many of them question the reasoning behind shutting down facilities at a time when the oil industry is experiencing significant profits. In addition to economic anxieties, the closure of these refineries poses critical supply concerns, as Valero and Phillips 66 together account for nearly 18% of California’s crude oil production capacity.

Projected Impacts of Refinery Closures

The anticipated reduction in gas supply will likely exacerbate an already precarious situation in California’s fuel market. According to experts from UC Berkeley, the planned closures could result in an “abrupt increase” in gas prices. Thus, the state’s residents may soon face an uphill battle against rising fuel costs.

Despite a general decline in gas consumption across California, the reduction in refinery capacity may be outpacing this decline. This imbalance may further fuel supply concerns and contribute to prices soaring even higher.

Regulatory Environment and Oil Supply Dynamics

California has one of the most stringent regulatory environments for oil companies in North America, a factor that Valero’s CEO has highlighted. In 2024, the state is relying on imported oil for 63.5% of its supply. This dependency raises questions about the state’s ability to maintain a consistent gas supply amidst the refinery closures.

Consulting firms indicate that rising fuel prices are typically a product of supply-demand dynamics alongside refinery shutdowns. A combined effect of these market factors may create shortages that lead to increased prices at the pump.

Government Response and Future Actions

In light of the impending refinery closures and the potential for soaring gas prices, Governor Gavin Newsom’s administration has initiated measures to monitor gas prices and combat price gouging. Additionally, Newsom has emphasized the need for closer cooperation with refiners to ensure a reliable gas supply for Californians.

Looking ahead, California is also aiming to phase out gas-powered cars by 2035 as part of efforts to mitigate emissions, though federal politics may impede this initiative. While there may be temporary predictions for lower prices as the summer driving season approaches, overall forecasts for gas prices in the long term remain negative, leaving residents and lawmakers alike grappling with the uncertainty of the state’s fuel future.

Deeper Dive: News & Info About This Topic

• Kron4: Gas Prices Could Soar with Refineries Closing in California
• Wikipedia: Gasoline
• CBS News: California Gas Prices Could Surge
• Google Search: California gas prices
• Mercury News: Will California’s High Gas Prices Go Even Higher?
• Encyclopedia Britannica: Oil
• KTLA: Gas Prices Could Top $8 in California by 2026