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Two large California oil refineries are shutting down, triggering mounting concerns from state legislators, industry groups and many others.
Assemblymember Mike A. Gipson of the Gardena district bluntly described his concern during a recent Sacramento hearing.
“This is a tremendous loss,” Gipson told NBC Los Angeles, referring to the looming closure of the Phillips 66 plant near L.A. “The jobs that it holds, the individuals … working each and every day, those individuals live in my district, they shop in my district, they add to the economy in my district.”
The Phillips 66 and Valero’s Benicia refineries are set to close in 2026. Together, the shutdowns will eliminate 284,000 barrels-per‑day of refining capacity — roughly 17% of the total used in the state.
Valero attributed its decision to “years of regulatory pressure (and) significant fines for air quality violations,” including an $82 million penalty levied in 2024. Phillips 66 similarly cited business challenges stemming from California’s strict environmental regulations.
“They have said that they cannot do business in the state of California,” Gipson reiterated. “The regulatory agencies have imposed on the refiners of California very stringent regulation that makes it very difficult for them to remain in the state of California.”
The way Gipson sees it, the state should do everything it can to ensure that its remaining refineries stay in California.
“These companies have been working to make sure they meet these standards, these goals and objectives that the regulatory agencies and legislature have set.”
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With California processing about 24% of its own crude oil needs but consuming a far greater share — some 13.1 million gallons daily — the impact of these closures is significant:
California drivers already pay the highest gas prices in the nation — around $4.85 per gallon, significantly greater than the $3.16 national average.
With less local supply, experts warn of a potential impact that could range from modest spikes (less than $1 per gallon) to more dramatic spikes if supply disruptions occur. One particular analysis forecasts prices could even soar over $8 per gallon by late 2026.
The impact could be felt across the West Coast. California refineries account for 11% of the coast’s refining capacity. With two major refineries shutting down and limited connectivity to other refining hubs across the country, the U.S. Energy Information Administration predicts significant fuel price volatility in the area in the near term.
“California can ill afford the loss of one refinery, let alone two,” said USC Professor Michael Mische in a May 2025 report.
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With fewer local refineries, California will have to rely more heavily on imported fuel, both from other U.S. regions and overseas. This could escalate shipping costs and increase emissions from tanker vessels at ports, as well as potentially the other refineries where the imported oil originates, due to differences in environmental or quality standards.
Each closure risks the loss of hundreds of direct and indirect jobs. The Benicia refinery supports about 400 employees, while Phillips 66 has around 900 workers and contractors. Layoffs will ripple through communities, hurting local economies and tax revenue.
Losing work is never easy, but there are steps you can take to protect yourself in the days following a layoff. One easy, immediate strategy is to consider taking a closer look at your budget for areas to save.
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Whether it’s home insurance or car insurance, you typically don’t have to wait until your contract expires to switch insurers, so you can jump on a better deal without waiting around.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
