Global refining stands at a pivotal crossroads as shifting regional demand patterns, escalating sustainability pressures, and heightened energy security concerns reshape the industry landscape.
Within the past year, two major California oil refineries have announced plans to shutter — moves that will pull about one quarter of a million barrels from the state’s daily supply of gasoline.
For a state that has been a standard-bearer in the push to get off fossil fuels, this might seem like a win. Instead, it’s caught political leaders off guard, unprepared, and scrambling to keep open the very facilities they once villainized.
The Phillips 66 refinery south of Los Angeles is slated to close by the end of this year, an announcement the company made last fall, two days after Governor Gavin Newsom signed legislation giving the state more authority to regulate such operations. This spring, Valero said it will close its Bay Area facility in 2026, citing in part a record $82 million fine for air pollution that was more than 360 times the legal limit.
Valero did not respond to a request for comment. Phillips 66 spokesperson Al Ortiz told Grist, “Our focus right now is on safely idling our facilities. We are proud of the work we have done and continue to do with the state to ensure we will be able to meet future market demand.”
Between the two closures, California is slated to lose 17 percent of its refining capacity, which could cause gas prices to surge past the already nation-leading price of $4.50 per gallon. It’s unclear what the closures might mean for reducing greenhouse gas emissions, as the state will likely import gasoline to cover a portion of the shortfall and people tend not to drastically decrease consumption even when prices go up.
Lawmakers don’t appear to have planned for this scenario.
“The state is largely without a system-wide transition plan,” Cottie Petrie-Norris, a Democrat who represents portions of Orange County in the state assembly, said at a recent hearing. Creating such a roadmap, she noted, “is one of the most complicated, and I believe important, challenges that policymakers will need to face in the decade ahead.”
By: bicmagazine / August 20, 2025
