OPIS Insights

The planned closures of two California refineries are expected to reduce the state’s refinery capacity by 17% over the next 12 months and may contribute to increases in West Coast fuel price volatility, the U.S. Energy Information Administration said in July.

Refinery Shutdowns and Capacity Changes

Phillips 66 will close its 147,000 b/d Los Angeles refinery by the end of 2025. Valero, meanwhile, is moving forward with plans to shutter its 145,000 b/d Benicia refinery by spring 2026.

Shown below are projected California and West Coast refined fuel capacity after these changes take place:

The U.S. Energy Information Administration said the supply shortfall created by the planned closings is likely to have an “outsized” impact on the region because it cannot easily access refined product supply from other parts of the country. California is expected to increasingly rely on imports from Asia, particularly for jet fuel and gasoline.

Other Refinery Moves

The closures add to a shifting refinery landscape across the region:

• PBF Energy’s Martinez refinery, damaged by fire in February 2024, is expected to fully restart by the end of 2025.
• HF Sinclair said it will increase product supplies to California from its refineries in Washington state and the Midcontinent to help offset the shortfall due to the shutdowns of two California refineries. The company is also boosting deliveries to Arizona and Nevada.
• Phillips 66’s Rodeo refinery has been converted to renewable diesel production, further reducing the state’s conventional fuel capacity.
  The EIA projects average U.S. West Coast gasoline prices could climb to $4.19 per gallon in 2026, up from an average of $4.09 per gallon for regular-grade gasoline in 2025, driven by the capacity losses. While lower crude oil prices could offset some of the impact in the short term, the long-term trend suggests higher reliance on imports.

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