California, August 25, 2025
News Summary
California is on the brink of significant changes in its energy sector as two major oil refineries—Phillips 66 and Valero—plan to shut down by 2026, removing approximately 284,000 barrels-per-day of refining capacity. This represents nearly 20% of the state’s total capacity and could lead to substantial job losses and fuel price increases. With California already having the highest gas prices in the nation, concerns are mounting about the economic and environmental ramifications of these closures, as well as the state’s future energy sustainability.
California Faces Major Oil Refinery Shutdowns by 2026
California is set to experience significant disruptions in its energy landscape as two major oil refineries, Phillips 66 and Valero, announce plans to shut down by 2026. These closures will collectively eliminate around 284,000 barrels-per-day of refining capacity, equating to nearly 20% of the state’s total capacity. The implications for local employment and fuel prices are already raising concerns among lawmakers and industry experts.
The Phillips 66 refinery in Wilmington is slated for closure by October 2025, while Valero’s Benicia facility will cease operations as part of the upcoming transitions. Approximately 900 workers at Phillips 66 and 400 employees at Valero may face job losses as a result of these changes, which could have detrimental effects on local economies, especially in districts represented by assembly members who are voicing concern over upcoming layoffs.
The state of California, despite currently processing about 24% of its crude oil needs, consumes significantly more fuel, averaging 13.1 million gallons daily. Recent data shows that California has the highest gas prices in the nation, with averages around $4.85 per gallon, a stark contrast to the national average of $3.16. Experts predict that the loss of local refining capacity could trigger gas price hikes ranging from modest increases to potentially exceeding $8 per gallon by late 2026. The impending closures are expected to amplify existing pressure on fuel prices, which are already at record highs.
Factors Behind the Closures
Both refinery closures are being attributed to a combination of regulatory pressures and compliance issues. The Valero refinery has faced significant fines for air quality violations, including an $82 million penalty assessed in 2024, while Phillips 66 has cited strict environmental regulations as a primary factor in its decision-making process.
Potential Economic and Environmental Impact
The economic fallout from the closures is anticipated to be severe, especially for communities that depend on the jobs provided by these refineries. Proximity to refinery employment means many affected workers reside in areas and districts particularly vulnerable to job losses, leading to heightened concerns among local leaders.
Going forward, California may have to increase its reliance on imported fuel, which could result in higher shipping costs and greater emissions from tanker vessels. In light of the forecasted disruptions in fuel supply, the California Air Resources Board has come under scrutiny for its regulatory framework, as it does not appear to actively assess consumer impacts related to its actions.
Legislative Response and Future Discussions
California legislators are currently raising questions about the effectiveness of state regulatory agencies in overseeing the oil and gas sector, especially amid rising fuel costs. Proposed discussions will include potential plans to redevelop the closed refinery sites, leaning towards alternative industrial applications. However, local opposition may arise concerning health and environmental implications linked to such developments.
In summary, these refinery shutdowns are poised to exacerbate California’s economic and environmental challenges, with increased volatility in fuel prices and supply disruptions likely threatening the state’s energy sustainability long-term.
Key Features Overview
| Feature | Details |
|---|---|
| Refinery Closures | Phillips 66 in Wilmington by October 2025 & Valero in Benicia by 2026 |
| Total Capacity Loss | 284,000 barrels-per-day, 20% of California’s refining capacity |
| Estimated Job Losses | Approximately 1,300 jobs combined |
| Current Gas Prices | $4.85 per gallon in California, $3.16 national average |
| Predicted Price Increase | Possible increase to over $8 per gallon by late 2026 |
| Environmental Implications | Increased reliance on imported fuel, higher emissions risk |
| Regulatory Critique | Calls for evaluation of regulatory impacts on consumers |
Frequently Asked Questions
Why are the refineries closing?
The closures are primarily due to strict environmental regulations and significant penalties for air quality violations, leading companies to opt for shutdowns rather than compliance.
What will be the impact on gas prices?
Experts anticipate that reduced refining capacity could lead to gas price spikes, potentially increasing by more than $8 per gallon by late 2026.
How many jobs will be affected?
The shutdowns may result in the loss of approximately 1,300 jobs, with significant implications for local economies.
What is California’s current dependency on oil?
California currently processes 24% of its crude oil needs but consumes about 13.1 million gallons daily, indicating a heavy reliance on local and non-local supply.
Deeper Dive: News & Info About This Topic
- LAist: Phillips 66 Shutting LA Refineries
- Energy at Haas: California’s Refinery Closure Drama
- KCRA: California Lawmakers & Regulators Clash Over Oil Refineries
- Kron4: Gas Prices Could Soar with Refineries Closing in California
- Moneywise: Gas Could Spike to $8 Per Gallon as Two Major Refineries Shut Down
- Wikipedia: Oil Refinery
- Google Search: California refinery closures
- Google Scholar: California oil refinery shutdown
- Encyclopedia Britannica: Oil Refinery
- Google News: California gas prices
Author: STAFF HERE HUNTINGTON BEACH
The Huntington Beach Staff Writer represents the experienced team at HEREHuntingtonBeach.com, your go-to source for actionable local news and information in Huntington Beach, 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 the Huntington Beach Surf City USA Marathon, the U.S. Open of Surfing, Fourth of July celebrations at the Huntington Beach Pier, and community festivals at Huntington Beach Central Park. Our coverage extends to key organizations like the Huntington Beach Chamber of Commerce and Visit Huntington Beach, plus leading businesses in retail, hospitality, and outdoor recreation that drive the local economy. As part of the broader HERE network, including HEREAnaheim.com, HERECostaMesa.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
