california could soon be running short of gasoline, possibly hiking some of teh highest gas prices in the country.
Refineries in the state have been closing for years with two more set to shutter soon: a Los Angeles-area refinery at the end of the month and a Bay Area one in April. Together, the two refineries provide about 17% of the state’s supply of gasoline.
California drivers already pay 50% more than the rest of the nation, about $4.32 per gallon. These closures could boost prices by another 50 cents, according to Andy Lipow, president of consulting firm Lipow Oil associates.
“The loss of the refineries are certainly going to result in California having much shorter gasoline supplies,” Lipow said. “The price of gasoline in California will rise on a sustained level, because it’ll have to attract imported gasoline month in and month out.”
The closures also risk widespread shortages if any of the remaining six refineries in California experience unplanned outages caused by fires or other accidents. those risks are more pronounced if the outages extend for a prolonged period – like the refinery in martinez, California, which suffered a fire in February and has yet to return to normal capacity.California drivers face the highest gas taxes in the nation, nearing 71 cents per gallon – more than double the national average, as reported by the American Petroleum Institute. A state carbon tax, levied on retailers and distributors, adds another 20 to 25 cents per gallon, according to OPIS, which tracks gasoline price data for AAA.
“California is not like the United States. They’re serious about suppressing carbon,” said energy analyst Patrick De Haan.
while the national average gas price is expected to fall to $2.75 per gallon, california’s prices are predicted to remain around the current average of $4.64 or even increase. “Where rest of the country will probably see lower prices in 2026 than 2025, I wouldn’t bet that’ll be the case for california,” De Haan stated.
The recent closure of the Phillips 66 Los Angeles refinery, deemed a “challenged asset” by CEO Mark Lasiher, will likely exacerbate the situation.However,the company assures it will continue to supply California’s demand through alternative means,including imports.
California won’t replace its closing refineries with new ones, betting on EVs and imports
California is not planning to replace its oil refineries as they close, a strategy based on the belief that declining demand, stricter fuel standards, and increased imports can offset the loss of refining capacity. The state is set to lose another refinery – the Phillips 66 facility in Rodeo – early in 2026 and is a similar size to the Valero refinery that’s closing.
Even with strict regulations on the blend of gasoline that can be sold in the state, California officials said other sources of gas and changes in the market will allow California to get by with fewer refineries.
“As California refining capacity decreases over time, the state will import less crude and more refined oil products, which refiners around the world now produce to meet cleaner burning fuel standards in california and elsewhere,” the California Energy Commission, which oversees gasoline supplies in the state, told CNN in a statement. “Overall demand for oil will decline as the transportation sector shifts to electricity and other clean,alternative fuels.”
EV sales trimming gas demand
Only about 6% of the cars on California roads are pure EV or plug-in hybrids,according to California Energy Commission. The majority of California drivers will need to keep filling up with gas for decades to come.
Still, California boasts the highest percentage of new car sales that are electric vehicles in the US, according to Cox Automotive. EVs accounted for nearly a quarter of sales in the state during the first nine months of the year, juiced by the end of a $7,500 federal EV tax credit in October.
California Refinery Closures Raise Concerns About Fuel Supply and Prices
California is facing increasing concerns over its fuel supply and potential price hikes as several oil refineries have announced closures or transitions away from producing gasoline. These closures are attributed to a combination of factors, including the state’s ambitious climate goals, stringent environmental regulations, and economic considerations.
https://www.cnn.com/2024/01/18/business/california-gasoline-refinery-closures/index.html
One significant factor is California’s plan to effectively ban the sale of new gasoline-powered vehicles by 2035.While this initiative faces challenges from the federal government,it has already prompted refinery operators to reassess their long-term investments in the state. https://www.cnn.com/2024/01/18/business/california-gasoline-refinery-closures/index.html Companies also cite increasingly strict environmental regulations, carbon taxes, and the substantial costs associated with upgrading facilities to meet these standards as contributing factors to their decisions.
!A driver refuels their vehicle at a Marathon gas station in Martinez, California, on June 30, 2025.
“these companies are making business decisions (based on conditions) years down the road and decided that California is a difficult place to do business,” explained Jodie muller, CEO of the Western States Petroleum Association, an industry trade group.https://www.cnn.com/2024/01/18/business/california-gasoline-refinery-closures/index.html
The continued closure of refineries raises concerns about the stability of the fuel supply and the potential for increased prices.Muller warned that “the system really gets weaker, prices climb and there could be disruptions down the road.” https://www.cnn.com/2024/01/18/business/california-gasoline-refinery-closures/index.html
date:2024-01-18 16:01:00