California is bracing for high pump prices as Phillips 66 announces the closure of its Los Angeles refinery. The shutdown process is set to begin as early as next week, with the facility expected to be permanently offline by the end of the year. This move, which was first announced last year, will result in the loss of jobs for approximately 600 employees and 300 contractors. With only a handful being reassigned to other roles within the company, concerns are mounting over the economic impact on the region.
The closure of Phillips 66’s refinery, coupled with the upcoming shutdown of Valero’s Benicia refinery in 2026, is expected to reduce California’s refining capacity by 17%. This could spell trouble for the state, which already faces the highest pump prices in the nation. Analysts warn that by late 2026, gasoline prices in California could soar to over $8 per gallon due to supply disruptions and the decrease in local refineries.
As lawmakers scramble to address the situation, California finds itself unprepared for managing a shrinking refinery fleet without a comprehensive transition plan in place. While imports may help fill the gap, they come with higher costs and increased emissions at the ports. The lack of a clear strategy to navigate this transition poses a challenge for balancing climate goals with the economic impact of rising fuel prices.
The closure of the LA refinery comes at a turbulent time for Phillips 66, as the company faces legal challenges and pressure from activist investors. The broader trend of refinery closures globally, driven by overcapacity, shifting demand, and environmental regulations, is exacerbating the situation in California. Without a clear roadmap for transitioning to a more sustainable energy future, the state risks facing the fuel shortages it sought to avoid.