Adobe Stock image | This aerial view shows an oil refinery on the beach in El Segundo in Los Angeles. The closure of two other California oil refineries threatens domestic supplies as the state seeks to boost drilling.

With the announcement of plans to shut down two oil refineries in California, consumers — as well as oil producers and businesses — could expect to see higher gas prices in the future.

A year ago, Phillips 66 announced that it would close its 139,000-barrel-per-day refinery Wilmington Los Angeles in the fourth quarter of 2025.

Approximately 600 employees and 300 contractors worked at the Los Angeles refinery, according to a news release from Phillips 66 published last year.

Valero submitted a notice in April to end refining operations at its 145,000-barrel-per-day Benicia refinery in the Bay Area by April 2026.

These closures are part of a trend of waning refinery capacity on the West Coast. In 2024, Phillips 66 ended operations at its Rodeo refinery, and Marathon closed its Martinez refinery in 2020.

While Gov. Gavin Newsom has had a bit of a change of heart when it comes to the oil industry in California, there’s a concern that it’s too little, too late. California is set to lose 17% of its oil refinery capacity within the next year from these closures, according to the Phillips 66 news release.

Drilling business

Clint Olivier, president and CEO of BizFed Central Valley, a nonprofit business and employer advocacy group, said these refinery closures are going to hurt California as its scrambles to replace 17% of its refined oil supply.

“The state has been so openly hostile to oil, refineries and the sources of power that exist now,” Olivier said. “We have aspirational goals, as a state and as a society to move towards cleaner energy and transportation.”

Olivier said that most people get around by cars that run on gasoline, and policy makers in Sacramento must consider the pain they’re causing for Californians.

He said policymakers must optimize the current infrastructure for Californians until new systems come online

Transportation and logistics companies don’t eat the higher costs of gas and diesel prices — they pass it on to consumers, Olivier said.

Olivier said that BizFed has an “all of the above” energy policy to power the state, including solar, hydrogen, wind as well as oil.

“Oil has a place in the California economy and a major role to play. California is making it extremely difficult for its economy,” Olivier said.

If California doesn’t produce its own, it will have to get it from some other state or country. California produces gas and oil safer and cleaner than anywhere else in the world, so it should produce what its resident’s need — affordable transportation fuel, Olivier said.

He hopes Gov. Newsom adopts a more “worldwide” perspective when it comes to oil legislation in the state to help Californians.

Refining policy

In late September, Newsom signed Senate Bill 237, introduced by Senator Shannon Grover (R-Bakersfield), which certifies the Kern County Environmental Impact Report, streamlining permitting to expand oil and gas production while maintaining environmental protections.

Through SB 237, Kern County will be now able to approve up to 2,000 new well drilling permits per year for the next 10 years.

For comparison, California approved 84 new well permits in 2024 and just a handful this year, according to a news release from Grove.

Les Clark, president of the Independent Oil Producers Alliance, a trade association that represents independent oil and gas explorers and producers, said they serve “mom-and-pop” producers and ones with no marketing or refining capabilities.

“SB 237 gives the refineries the ability to know that there is going to be more oil to go through their facility,” Clark said. “It’s good news that there is going to be oil in the pipelines but we have to have the refineries.”

With stringent California regulations, it would be difficult to see construction of new oil refineries in the state, he added.

Major world events, such as the current war in Ukraine, also have an impact on the price of oil as producers abroad are part of the same world market, Clark said.

Clark said that moves like SB 237 are a step in the right direction, but it should have been done long ago.

Jobs in the oil industry pay good wages, Clark said. He has concerns that jobs in alternative energy won’t seem as attractive to workers.

“For the guys that are going to get back into drilling, with the regulations, a lot of them might go to Texas,” Clark said. “Through those downtimes you lose some top employees. That is going to be something that the industry is going to have to deal with.”