California just got a wake-up call about the real-world consequences of its misguided energy policies. 

Two major refineries – Phillips 66 in Los Angeles and Valero in Benicia – have announced plans to shut down operations in the coming 12 months, removing nearly one-fifth of California’s in-state fuel production. 

These closures are a direct response to new refinery mandates signed into law by Gov. Gavin Newsom – and they will lead to even higher gas prices for drivers across California, Arizona, and Nevada. As UC Berkeley Economist Severine Borenstein said:  

“California is phasing out its gasoline consumption and refiners see that coming. We should be seriously concerned about how all that gasoline supply is going to get replaced.”(emphasis added) 

After all, as Borenstein further explained, California still has a lot of gasoline-powered vehicles on the road and the state already has some of the highest gasoline prices in the country – a fact that isn’t going to change any time soon.  

California Refiners Are Rushing to the Exits 

In March, Phillips 66 said it would close its Los Angeles-area refinery by the end of 2025. That facility processes 139,000 barrels per day – about 8.6 percent of California’s capacity. 

Just weeks later, Valero followed suit, announcing plans to shut down its Benicia refinery by April 2026. That plant handles another 145,000 barrels per day – nearly 9 percent of the state’s fuel supply. 

Combined, the two closures represent a 17 percent loss of California’s refining capacity, dealing a massive blow to the state’s ability to produce its own gasoline. Benicia Mayor Steve Young warned this week that closures could also have national security implications, as the Valero facility supplies jet fuel to Travis Air Force Base as well, saying:  

“If that is stopped, what does that mean to the base? Travis uses an amazing amount of fuel to fly all their planes, much more than can be easily replaced, and certainly not replaced within a year. So I think that this becomes a matter of real concern to the Defense Department and it’s potentially a national security issue.” 

Newsom has not explained what will happen if Valero’s direct pipeline to Travis Air Force Base goes offline, or how quickly the state could offer an alternate source of fuel. 

When refineries go offline or in this case shut down, California is left to make up the difference by importing fuel by sea – which is slow, environmentally irresponsible, and ultimately more expensive. Even Newsom has acknowledged importing fuel by sea is environmentally counterproductive, explaining: 

“As it relates to managing decline, we’ve got to address the issue of demand. California since 1985 has declined its production by 60 percent, but we’ve only seen a modest decrease in demand by 4.4 percent. Sixty percent decline in production, but only a 4.4 percent decline in demand. And that means we are making up for a lack of domestic production from Saudi Arabia, Ecuador, and Colombia. And that’s hardly an environmental solution when you look globally.”  

With fewer refineries operating and no new ones being built, California is becoming more dependent on foreign imports just to keep the pumps running. That means higher prices, higher carbon emissions, and greater risk of shortages during local or national emergencies. 

Gavin Newsom Driving Refinery Closures 

These refinery shutdowns come just months after Newsom signed ABX2-1, a controversial law that: 

• Empowers the state to implement a profit margin penalty, or price controls on energy producers – a policy proven to cause shortages and price hikes.  

• Gives the state power to limit when refineries can conduct maintenance critical for safety 

• Requires companies to stockpile large volumes of fuel 

• Increases state oversight of refinery operations 

Newsom framed the bill as a crackdown on “greedy” oil companies, but critics – including industry leaders, labor unions, and even Democratic and Republican governors from Arizona and Nevada – warned the law would drive up costs, reduce supply, and chase investment out of the state. 

Those warnings appear to be coming true. When California’s Martinez refinery temporarily shut down last year, gasoline prices jumped in Phoenix and Las Vegas – and that was with just one plant offline. Now two more are closing permanently. 

Bottom Line: California is losing two of its largest refineries, and it’s no coincidence this is happening just months after new refinery mandates were signed into law. These closures will increase reliance on expensive imports, drive up emissions, and increase prices across California, Arizona, and Nevada. Voters are right to ask who’s paying the price – and whether Gavin Newsom is listening.