California is racing toward a self-inflicted energy disaster. The shutdown of Phillips 66's Los Angeles refinery by October 2025 and Valero's Benicia refinery by April 2026 will erase nearly 20% of the state's crude oil refining capacity. Depending on California's gasoline supply, Arizona and Nevada will feel the impact of this regional crisis. Governor Gavin Newsom's regulatory assault on the oil industry is driving this crisis, and its effects will be felt at every gas pump and in every wallet.
The numbers are stark. Phillips 66 refines 139,000 barrels daily (8.57% of California's refining capacity), and Valero's Benicia facility refines 145,000 barrels daily (8.94%). Together, they account for 284,000 barrels a day—17.41% of the state's 1.62-million-barrel capacity. California refineries provide enough to meet in-state demand (1.4 million barrels per day) and send gas to Nevada and Arizona. Losing this capacity would result in a daily gasoline shortage of 6.6 to 13.1 million gallons by 2026, according to University of Southern California professor Michael Mische — a catastrophic blow to the region's fuel supply.
California's "energy island" status aggravates the situation. Isolated from national pipeline grids, the state relies on in-state refineries to produce its unique gasoline blend, mandated by the California Air Resources Board. Foreign refineries in India, South Korea, or the Middle East are the primary non-California options for supplying this fuel. Shipping by sea is costly and subject to global market disruptions. Once these refineries go off-line, they're finished—new infrastructure or pipeline resuscitation is all but untenable under California's strict regulations.
Gas prices will surge. California's average gasoline price was $4.82 per gallon about six weeks ago. Mische projects that it will reach $6.43 in late 2025, following the Phillips shutdown, and $8.43 in 2026, after Valero's exit—a potential 75% increase. Newsom policies fuel this rise: Senate Bill X1-2 caps refinery profit, Assembly Bill X2-1 mandates maintenance and inventories, and the Low Carbon Fuel Standard entails compliance costs. A planned excise tax increase this summer will further drive up prices. Californians will pay an additional $600 to $1,000 annually, with Arizona and Nevada experiencing similar price increases.
Newsom's alignment with eco-zealots is dismantling California's oil and gas industry. In-state crude production has declined 63% over the decades, increasing reliance on dirtier foreign oil from the Middle East and South America. The 2035 ban on new gas-powered cars and stifling regulations prompted Chevron to relocate to Texas, and now Phillips and Valero have followed suit.
This is an artificial crisis in a vital industry. Or, in baseball parlance, this is a significant unforced error. And an expensive one for Californians, Nevadans, and Arizonans. Newsom and the California Democrats, in their quest for environmental piety, are reckless without regard to the consequences for energy affordability and security. The results of this imprudent drive to stifle in-state refining of oil will be to reduce the quality of life of all of us. The complete lack of prudence in public policymaking here is monumental.
