Phillips 66 announces permanent refinery shutdown in California after new rules pass

(The Center Square) - A major Los Angeles refinery with 8% of California’s refinery capacity announced it would be shutting down in 2025 soon after California Gov. Gavin Newsom called for and passed new refinery regulations. The shutdown could have spillover effects for Arizona and Nevada, which rely on California for gasoline.

Republicans were quick to note this was warned as a potential consequence of the new bill, though refinery operator Phillips 66 stated the newly signed law giving the state the power to decide how much inventory it must maintain and when it is allowed to shut down for maintenance and repairs did not factor into its decision.

California is a “ fuel island ” already “ barely ” producing enough of the special blend of fuel required in the state to meet its own demand, meaning the loss of 8% of its refining capacity could significantly increase the price at the pump. Earlier this year, the state reported that there were only nine California refineries making the state’s special fuel, meaning losing another Los Angeles refinery would bring the state down to eight.

Further supply issues from the new regulations could , as the governors of Arizona and Nevada warned, cause “cost increases and supply shortages” that push prices up even higher. Arizona and Nevada are dependent on California refineries for fuel supplies.

Beyond shutdowns and regulations, a third factor that could raise gas prices even higher is a new proposal to increase the cost of carbon credits required under the state’s cap and trade program; the state estimates the proposed measure would increase the price paid per gallon of gas by an additional 47 cents.

Republicans contend that the high concentration of actions to raise gas prices may be part of a ploy to move Californians onto buses and trains.

“This will cut over 8% of California's gasoline supply, and comes just days after Democrats in Sacramento voted in support of Newsom's bill to go after oil companies,” said State Sen. Brian Dahle, R-Bieber, on X. “With lower fuel supplies, prices are bound to go up, forcing Californians into public transit.”

While Bieber’s claim may sound alarmist, state and local policies do suggest there is a drive to reduce gasoline car use. California aims to ban the sale of new gasoline cars starting in 2035, and many cities, including Los Angeles , are pursuing so-called “congestion charge” systems that are aimed at reducing traffic and car use in urban areas.