The US Energy Information Administration or EIA stated yesterday that California is set to lose 17% of its oil refinery capacity over the next 12 months because of two planned refinery closures. If realized, the closure of the facilities is likely to contribute to increases in fuel price volatility on the West Coast. Phillips 66 announced plans last October to close its 139,000-barrel-per-day (b/d) Wilmington refinery in the Los Angeles area later this year. Valero submitted a notice in April to end refining operations at its 145,000-b/d Benicia refinery in the Bay Area by the end of April 2026. The refinery closures continue a trend of decreasing refinery capacity on the West Coast, following the end of petroleum refining operations at Phillips 66’s Rodeo refinery early last year and the closure of Marathon’s Martinez refinery in 2020.

California usually has higher retail gasoline prices compared with the national average. One reason is the relative lack of logistical connectivity on the West Coast to other refinery hubs in the United States, such as the Gulf Coast. Although the Los Angeles and Benicia refineries make up less than 2% of current U.S. refining capacity, they account for 17% of California refinery capacity and 11% of West Coast (PADD 5) capacity. The supply shortfall left by their exit is therefore likely to have an outsized impact on the region because it cannot be easily filled by other refineries elsewhere in the country. Given the limited connectivity to other U.S refining hubs, the most likely source of replacement fuels will be imports from Asia, particularly imports of jet fuel and gasoline. California’s unique specification gasoline blendstock, known as CARBOB, can only be manufactured by properly equipped refineries.

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