California, August 25, 2025
News Summary
California is set to lose two significant oil refineries, Phillips 66 and Valero, by 2026, reducing refining capacity by 20% and threatening job stability for over 1,300 workers. The closures come amid heightened regulatory scrutiny and could lead to gas prices spiking to over $8 per gallon. As the state grapples with these changes, lawmakers are evaluating the implications for local jobs and economic stability.
California is bracing for significant changes in its oil refining landscape as two major refineries, the Phillips 66 facility in Wilmington and the Valero refinery in Benicia, are scheduled to close by 2026. The Phillips 66 plant is set to shut down by October 2025, while the Valero facility’s closure was announced as an impact of ongoing regulatory pressures and substantial fines for air quality violations.
Together, these closures will remove approximately 284,000 barrels-per-day of refining capacity from California’s energy grid, accounting for nearly 20% of the state’s total refining capacity. This significant reduction raises concerns not only about the potential spike in gas prices but also about job losses affecting local communities, particularly for the approximately 900 workers at Phillips 66 and 400 employees at Valero.
Assemblymember Mike A. Gipson has voiced his concerns regarding the economic ramifications of these closures, especially for workers in his district who will be directly impacted by the layoffs. The potential loss of jobs represents a serious economic challenge for communities already struggling with high living costs and unemployment rates.
The decision to close the Valero refinery follows years of regulatory scrutiny and hefty fines for violations of air quality standards, including an $82 million penalty levied in 2024. In contrast, Phillips 66 has cited strict environmental regulations as a primary reason for its closure, indicating that compliance has become increasingly unfeasible.
Currently, California’s oil production meets only about 24% of its crude oil needs, with the state consuming around 13.1 million gallons of gasoline daily. This reliance on external sources, compounded by the pending refinery closures, could drastically alter the local market. As gas prices are already the highest in the nation, averaging around $4.85 per gallon compared to the national average of $3.16, further cutbacks on local refining capacity could lead to anticipated price spikes. Experts predict that consumers may face price increases that could soar to over $8 per gallon by late 2026.
Should these refineries shut down, California will likely have to rely more heavily on imported fuel, raising concerns about increased shipping costs and the environmental toll from the transportation of fuel. The potential influx of imported energy supplies may also come with the challenge of meeting California’s strict environmental standards, further complicating the energy landscape.
As communities contemplate the economic fallout from these closures, California lawmakers are critically assessing the state’s regulatory approach to the oil and gas sector. There is growing discontent regarding the effectiveness of regulatory agencies, particularly within the California Air Resources Board, which has been criticized for not adequately evaluating how its regulations impact consumers and drivers.
The anticipated closure of these refineries amplifies existing economic and environmental issues in California, potentially leading to increased volatility in fuel pricing and frequent supply disruptions. Lawmakers are discussing potential redevelopment plans for the closed sites, which may result in alternative industrial uses, though these proposals might face community pushback due to health concerns linked to industrial activities.
The repercussions of these refinery shutdowns extend beyond immediate job and economic loss, casting a long shadow over California’s energy sustainability and its future market stability.
Frequently Asked Questions
Why are the Phillips 66 and Valero refineries closing?
The closures are due to a mix of regulatory pressures, environmental compliance challenges, and significant fines for air quality violations particularly affecting Valero’s operations.
What impact will these closures have on gas prices in California?
Experts warn the closures could lead to gas price spikes, with possible increases ranging from modest amounts to more than $8 per gallon by late 2026.
How many jobs will be lost due to the refinery closures?
The closures could lead to the loss of around 1,300 jobs, with Phillips 66 employing approximately 900 and Valero about 400 workers.
What alternative fuel options may California explore?
California may need to rely more heavily on imported fuels, which could introduce additional costs and potential non-compliance with state environmental regulations.
Key Features of the Article
- Closures of Phillips 66 and Valero refineries: Significant loss of refining capacity in California.
- Job Losses: Estimated loss of around 1,300 jobs, raising economic concerns.
- Impact on Gas Prices: Predictions of increased fuel prices, potentially exceeding $8 per gallon.
- State Dependence: California currently processes 24% of its crude oil needs.
- Environmental Regulations: Ongoing regulations contributing to refinery shutdowns.
Deeper Dive: News & Info About This Topic
- LAist: Phillips 66 Shutting LA Refineries
- Wikipedia: California
- Energy at Haas: California’s Refinery Closure Drama
- Google Search: California refinery closures
- KCRA: California Lawmakers, Regulators Clash on Oil Refineries
- Google Scholar: California refinery closures
- MoneyWise: Gas Could Spike to $8 per Gallon
- Encyclopedia Britannica: California oil refineries
- KMPH: Why are All the Oil Refineries Leaving California?
- Google News: California refinery closure
Author: STAFF HERE SAN DIEGO WRITER
SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
