• California is on the brink of a fuel crisis due to the planned shutdown of two major oil refineries, which could lead to a 75 percent increase in gas prices by the end of 2026.
• The Phillips 66 refinery in Los Angeles and the Valero Energy Corp. refinery in Benicia are set to close by the end of 2025 and April 2026, respectively, reducing California’s refining capacity by 21 percent,
• The closures are expected to create a daily gasoline deficit of between 6.6 and 13.1 million gallons, forcing California to rely on more expensive out-of-state and foreign imports, exacerbating the state’s already high gas prices.
• California’s unique regulatory environment and legal battles with oil companies over climate change complicate the situation. Gov. Gavin Newsom is working with the California Energy Commission to ensure a stable fuel supply, while Republican lawmakers advocate for measures like investment tax credits and increased drilling permits.
• The looming crisis poses significant threats to California’s economy, consumer prices and quality of life. Policymakers face urgent pressure to address the situation, with decisions in the coming months critical to shaping the state’s energy future.

California, the nation’s most populous state, is on the brink of a fuel crisis that could send gas prices soaring by as much as 75 percent by the end of 2026.

This alarming projection comes from a recent analysis by the University of Southern California (USC), highlighting the potential economic and social repercussions of the impending shutdown of key oil refineries in the state.

Two major oil refineries in California are slated to close in the coming years. The Phillips 66 refinery in Los Angeles – which accounts for approximately eight percent of the state’s refining capacity – is scheduled to shut down by the end of 2025.

Additionally, Valero Energy Corp. announced last month that it will either shut down or significantly restructure its Benicia refinery by April 2026. Located in the San Francisco Bay Area, Benicia represents about nine percent of California’s refining capacity. (Related: California’s gas prices: A crisis of its own making, USC study finds.)

These closures are expected to have a profound impact on the state’s fuel supply and prices. According to the USC analysis authored by Professor Michael Mische at the university’s Marshall School of Business, the combined effect of these shutdowns could lead to a 21 percent reduction in California’s refining capacity from 2023 to April 2026.

The USC study also warns that the reduction in fuel supplies could create a daily gasoline deficit ranging from 6.6 million to 13.1 million gallons. This shortfall would not only affect consumers at the pump but also ripple through various industries – including air travel, food delivery, agriculture, manufacturing and healthcare.

The study emphasizes that the loss of in-state gasoline production would force California to rely on out-of-state and foreign refineries, potentially leading to increased dependence on more expensive imports. This shift could exacerbate the state’s already high gas prices, which are typically 40 percent to 50 percent above the national average.

Refinery closures trigger ripple effect on supply and prices

California’s reliance on imported fuel is not a new issue. Historically, the state has turned to refineries in Washington state to compensate for production shortages. However, the Evergreen State’s current refining capacity is less than 40 percent of California’s and it is unlikely to have the surplus capacity needed to offset the impending shortfall.

Moreover, California’s unique regulatory environment and commitment to reducing greenhouse gas emissions add another layer of complexity. The state is currently suing major oil companies over alleged deception regarding the risks of climate change and fossil fuel combustion. This legal battle, coupled with the state’s ambitious climate goals, creates a challenging landscape for policymakers and industry leaders.

In response to the looming crisis, California Gov. Gavin Newsom has directed the California Energy Commission (CEC) to work closely with oil companies to ensure a stable and affordable fuel supply. In an April 21 letter, Newsom emphasized the need for collaboration and expressed his belief that Californians can be protected from price spikes while allowing refiners to operate profitably.

However, Republican lawmakers have criticized the governor’s approach. State Senate Minority Leader Brian Jones (R-District 40) called the refinery closures “a looming energy and economic crisis” and urged the governor to take immediate action to prevent further closures and support long-term energy stability. Jones advocated for measures such as investment tax credits and regulatory relief.

Similarly, State Sen. Shannon Grove (R-District 12) from Bakersfield urged the governor to increase new drilling permits to support in-state oil production, rather than relying on foreign imports. Grove highlighted the dramatic decline in new drilling permits, which have plummeted by 97 percent over the last five years.

California’s energy collapse looms

Industry experts and stakeholders have echoed the concerns raised by policymakers. Mike Umbro, founder and CEO of Californians for Energy and Science, described Newsom’s letter as an attempt at damage control. He urged the governor to take a more direct approach by declaring an energy crisis and issuing drilling permits.

Daniel Villaseñor, a spokesman for the governor’s office, responded to questions by stating that Newsom’s letter “speaks for itself.” Sandy Louey, a CEC spokeswoman, emphasized the agency’s commitment to exploring options to ensure an affordable, reliable and safe transportation fuel supply. Louey noted that the concept of a state-owned refinery is one of several potential solutions being considered.

As California faces the potential closure of key oil refineries, the state is at a crossroads. The impending crisis could have devastating effects on the economy, consumer prices and the overall quality of life for millions of Californians.

Watch Bill O’Reilly discussing how progressive policies have ruined California.

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Sources included are: 

ZeroHedge.com

FoxLA.com

NTD.com

Brighteon.com