California, August 25, 2025
News Summary
California is set to lose significant refining capacity as Phillips 66 and Valero plan to close their refineries by 2026, eliminating 284,000 barrels per day or nearly 20% of the state’s output. These closures are expected to cause considerable job losses, impact local economies, and potentially lead to higher gasoline prices. Legislators are now scrutinizing regulatory actions affecting the oil industry amid concerns about future fuel reliance and environmental implications.
California is facing significant changes in its oil refining landscape, as two major refineries, owned by Phillips 66 and Valero, are scheduled to shut down by 2026. The closures are set to eliminate approximately 284,000 barrels per day of refining capacity, which represents nearly 20% of the state’s total refining capabilities. Phillips 66 plans to close its Wilmington facility by October 2025, while the Valero refinery in Benicia has released its timeline for closure.
These impending shutdowns have raised serious concerns regarding potential job losses and economic impacts in the local communities, particularly in areas where affected workers reside. Assemblymember Mike A. Gipson has noted that many workers impacted by these closures live in his district, emphasizing the direct effects on families and the regional economy. It is estimated that the closures could lead to the loss of hundreds of jobs, with Phillips 66 employing around 900 workers and Valero supporting about 400 employees.
Both refineries have attributed their decisions to close to strict regulatory pressures and environmental compliance challenges. The Valero refinery’s closure can be linked, in part, to years of regulatory scrutiny and hefty fines for air quality violations, including an $82 million penalty imposed in 2024. On the other hand, Phillips 66 has highlighted the stringent environmental regulations as a primary reason for its operational halt.
Currently, California produces only about 24% of its crude oil needs, yet the state consumes a significant 13.1 million gallons of gasoline and diesel each day. With California already experiencing the highest gas prices in the nation—averaging around $4.85 per gallon compared to the national average of $3.16—experts anticipate that the reduction in refining capacity could trigger further price increases. Predictions range from modest increments of less than a dollar to alarming spikes that may exceed $8 per gallon by late 2026.
The closures may compel California to depend more on imported fuels, which could escalate shipping costs and increase the carbon emissions associated with tanker vessels. Legislators in the state are beginning to scrutinize the actions of regulatory agencies in managing the oil and gas sector, particularly amid rising fuel costs and potential threats to energy reliability.
Furthermore, the closures could pave the way for increased volatility in fuel prices, coupled with supply disruptions, which can complicate the state’s energy landscape moving forward. Experts warn that these industry shifts may exacerbate existing economic and environmental challenges, particularly concerning reliance on out-of-area energy sources that may not align with California’s robust environmental standards.
The California Air Resources Board has been criticized for its lack of active assessment concerning the impact of its regulatory actions on consumers and drivers. In light of these developments, there is also ongoing discussion about potential plans to repurpose the closed refinery sites for alternative industrial uses. However, such initiatives might confront local opposition, primarily due to health concerns associated with adjacent industrial activities.
California is at a critical juncture regarding its energy and economic future as it braces for the substantial implications of these refinery closures. The state’s efforts to adapt to changing regulations and energy demands will be pivotal in determining its ability to maintain economic stability and ensure environmental compliance.
FAQ
Q1: Why are the refineries closing?
A1: The closures are primarily due to strict regulatory pressures, environmental compliance costs, and significant violations leading to substantial fines.
Q2: How much refining capacity will be lost?
A2: The anticipated closures will eliminate about 284,000 barrels-per-day of refining capacity, which is nearly 20% of California’s total capacity.
Q3: What will be the potential impact on gas prices?
A3: Experts predict gas price hikes that could range from increases of less than $1 up to possibly exceeding $8 per gallon by late 2026.
Q4: How many jobs will be affected by the refinery closures?
A4: Phillips 66 and Valero’s closures could result in the loss of approximately 1,300 jobs—900 from Phillips 66 and around 400 from Valero.
Q5: Is California reliant on imported fuel?
A5: Yes, with local refining capacity diminished, California may increasingly rely on imported fuel, leading to higher shipping costs and environmental concerns.
| Feature | Details |
|---|---|
| Refinery Closures | Phillips 66 (Wilmington by October 2025) and Valero (Benicia by 2026) |
| Capacity Loss | 284,000 barrels-per-day, nearly 20% of total California refining capacity |
| Job Losses | Approximately 1,300 total—900 (Phillips 66), 400 (Valero) |
| Current Gas Prices | California average: $4.85; National average: $3.16 |
| Predicted Gas Price Spike | Potentially exceeding $8 per gallon by late 2026 |
| Imported Fuel Dependence | Increased reliance likely due to loss of local refining capacity |
Deeper Dive: News & Info About This Topic
- LAist: Phillips 66 Shutting LA Refineries
- Wikipedia: Oil Refinery
- Energy at Haas: California’s Refinery Closure Drama
- Google Search: California refinery closures
- KCRA: California Lawmakers, Regulators Clash on Oil Refineries
- Encyclopedia Britannica: Oil Industry
- Moneywise: Gas Could Spike to $8 per Gallon as Two Major Refineries Shut Down
- Google News: California gas prices
- KMPH: Why Are All the Oil Refineries Leaving California?
- Google Scholar: energy regulations California
- San Diego Union-Tribune: A Do-Over for Newsom
Author: Anaheim Staff Writer
Anaheim Staff Writer The Anaheim Staff Writer represents the experienced team at HEREAnaheim.com, your go-to source for actionable local news and information in Anaheim, Orange 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 major conventions at the Anaheim Convention Center, including NAMM and VidCon, exciting games at Angel Stadium and Honda Center, and developments at Disneyland Resort Our coverage extends to key organizations like the Anaheim Chamber of Commerce and Visit Anaheim, plus leading businesses in hospitality, entertainment, and innovation that power the local economy As part of the broader HERE network, including HERECostaMesa.com, HEREHuntingtonBeach.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
