Gas prices in California could soar to $8 a gallon as two of the state’s largest refineries, Phillips 66 in the Los Angeles area and Valero’s Benicia facility, prepare to shut down operations by 2026. The closures are raising red flags over job losses, higher fuel costs, and long-term economic repercussions.
“This is a tremendous loss,” said Assemblymember Mike A. Gipson, whose Gardena district stands to lose economically. “They shop in my district, they add to the economy in my district.”
Combined, the closures will eliminate nearly 300,000 barrels of daily refining capacity, which accounts for around 20% of California’s total. Valero cited an $82 million fine for air quality violations in 2024 and years of environmental regulations. Phillips 66 also blamed strict state policies.
“They have said that they cannot do business in the state of California,” Gipson stressed. “The regulatory agencies have imposed…very stringent regulation that makes it very difficult for them to remain.”
California only produces about 24% of the crude oil it consumes—more than 13 million gallons a day. Losing two major facilities could trigger severe price spikes and supply issues.
“California can ill afford the loss of one refinery, let alone two,” said USC Professor Michael Mische.
In addition to possibly higher fuel costs, about 1,300 jobs are at risk, and local governments could face reduced tax revenue. Though improved air quality is a potential upside, experts warn of greater dependence on imported fuel and increased emissions.
“We must do everything we can to keep them here,” Gipson urged.
