Gas prices could reach $8/gallon due to closure of two California refineries

From Yahoo Finance: 2025-06-23 07:31:00

Two large California oil refineries, including Phillips 66 and Valero, are shutting down in 2026, eliminating 300,000 barrels-per-day of refining capacity, approximately 20% of the state’s total. Valero cited regulatory pressure and an $82 million penalty as reasons for the closure.

Concerns are mounting over the impact of these closures, with Assemblymember Mike A. Gipson bluntly describing the loss as tremendous. The looming closure of the Phillips 66 plant near L.A. is expected to affect jobs, the local economy, and consumers.

With California processing 24% of its own crude oil but consuming a much larger share, the closure of the refineries will have significant implications. California already has the highest gas prices in the nation, with drivers paying around $4.85 per gallon, much higher than the national average.

Experts warn of potential gas price spikes ranging from $1 to $8 per gallon by late 2026 due to the refinery closures. USC Professor Michael Mische emphasized the state’s vulnerability with the loss of refineries, highlighting the potential impact on jobs, local economies, and tax revenue.

As California’s refineries close, the state faces challenges in maintaining local supply, job losses, and economic repercussions. The closures will lead to increased reliance on imported fuel, escalating shipping costs, and potentially lax environmental standards in other regions supplying fuel to California.

Read more: Gas prices could hit $8/gallon as two refineries shut down