Despite being the seventh-largest producer of crude oil and third in refining capacity, California continues to demonstrate a desire for self-destruction with its anti-oil and gas stance. California’s aggressive push for destructive energy policies has already resulted in the closure of oil refineries and even the promised relocation of oil major Chevron to friendlier Houston Texas. The closure of refineries statewide will put pressure on California’s ability to provide gasoline to its residents. This will further exacerbate the statewide high gas prices and frustrate already financially struggling Californians.
By instituting so many aggressive emissions regulations, California has significantly limited its ability to source oil and gasoline effectively. This has turned California into an “oil island” because it lacks the pipeline infrastructure to import from other states, and the Jones Act limits what can be imported by ship from energy-abundant Gulf states such as Texas. For this reason, imports only account for 8% of California’s gasoline supply. However, this percentage may need to rise to 17% if the state does not revise its aggressive drilling and refining policies, especially with the announcement of the closure of three of the State’s major refineries.
California currently has 13 active refineries, 11 of which produce 90% of the state’s gasoline. However, with the closure of Phillips 66’s refinery by the end of 2025 and Valero’s announcement that it would shut down operations at its Benicia refinery by April 2026, the state will lose up to 20% of its current refining capacity. With two locations just outside of Los Angeles, the Wilmington and Carson twin refineries regularly accounted for about 8% of California’s gasoline production, while the San Francisco area Benicia refinery accounts for approximately 9% of gasoline production. The announced closures have taken many by surprise, despite the challenging economic climate, prompting some state officials to urge the state to take control of at least one refinery to guarantee a consistent supply of state-approved gasoline.
California has the potential to be a major oil-producing state, given that it already, with extremely stringent laws limiting exploration, comes in seventh place in proved reserves by state at 1,492 million barrels of oil as of 2022. As a result of these hostile policies, major refiners with a presence in California, such as Chevron, Valero, Marathon, PBF Energy, and Phillips 66, are having to change their corporate strategies to account for an artificially induced decrease in demand, which has resulted in weak margins for refining services. California’s refineries have three sources of crude oil: California and various other states, at 29%; Alaska, at 15%; and foreign sources, at 56%.
Instead of changing their bad energy policies to allow for more oil and gas exploration and less regulatory bloat, forces in Sacramento are debating the merit of having the State take control of some of the soon-to-be-abandoned refineries. Twelve countries have state-owned oil refineries, including Mexico, Russia, Venezuela, China, and Saudi Arabia – countries not known for embracing free markets and transparent governance. Why California would want to be grouped with these countries is troubling, yet not surprising. These potential actions should be concerning not only to Californians, who continue to vote for this madness, but also to Americans living in states that mirror California’s climate extremism, such as New York and Massachusetts.
Policymakers in California assumed they didn’t have to worry about high gas prices since they were hard at work transitioning to electric vehicles via the Advanced Clean Cars II regulations. These regulations mandated that all vehicles sold in California by 2035 be zero-emission. Sacramento’s logic must have been that by preventing the statewide sale of new gas-powered vehicles, high gas prices would be an issue that simply resolves itself. However, this strategy isn’t off to a great start since a mere 25.3% of statewide car registrations were EVs in 2024, far short of California’s initial goal of 35%.
Fortunately, Californians who believe in common sense may finally exhale a sigh of relief, since the recent passing of H.J. Res 88 by the U.S. Senate has effectively shut down California’s Clean Air Act Waiver for the State’s Advanced Clean Cars II regulation. This action has struck a significant blow to Sacramento’s goal of controlling the free market by forcing the sale of EVs through the banning of gas-powered vehicles.
Anti-oil and gas policies have led to a self-inflicted oil and gasoline supply chain crisis in the Golden State. With such slim operating margins, oil majors are beginning to realize that until California has a political renaissance based on fiscal realism, the survival of the producers and refiners hinges on an exodus from the state. The ultimate irony is that for all of California’s talk about being a warrior against climate change and a champion for renewable energy, Sacramento may end up being the proud new owner of a slightly used, 100-year-old refinery.