CIPA Urges CEC to Prioritize California Production and Preserve Refineries

CIPA met with the California Energy Commission on October 20 to provide feedback on its developing Transportation Fuels Assessment, urging the agency to broaden its supply recommendations beyond increased gasoline imports. CIPA emphasized two interconnected priorities: expanding responsible in-state crude oil production and keeping every currently operating California refinery open and operational.

The meeting comes as the CEC’s own analysis illustrates a widening disconnect between California’s petroleum demand and its ability to manufacture transportation fuels. The presentation showed a 22 percent decline in in-state gasoline refining capacity, compared with only a 3 percent reduction in gasoline demand, alongside a 108 percent increase in gasoline imports. Those figures underscore CIPA’s concern that California is losing production capacity much faster than consumers are reducing their fuel needs.

Strengthening Production and Refining Together

CIPA urged the commission to evaluate increased California crude production as a central supply solution. A stronger local crude supply can support the continued operation of California refineries by providing feedstock without the lengthy ocean voyages and associated shipping expenses required for overseas barrels. Although delivered crude prices also depend on quality, market conditions, and contractual arrangements, reducing transportation costs and logistical exposure offers an important opportunity to improve refinery supply economics.

Production and refining must be considered together. Local crude needs operating refineries to become gasoline, diesel, and aviation fuel, while those refineries need reliable, competitively priced crude to remain viable. Policies that constrain either side weaken the entire system.

CIPA therefore encouraged the CEC to examine what is necessary to retain the state’s remaining refineries, alongside measures that allow California producers to supply more of their feedstock. Preserving that manufacturing capacity should be an explicit policy objective, supported by practical recommendations on permitting, investment, and reliable crude supply.

Imports Should Be a Contingency, Not the Central Goal

CIPA also expressed concern that the presentation placed too much emphasis on accommodating increased gasoline imports rather than identifying ways to manufacture more fuel in California from locally produced crude.

Information discussed illustrated how quickly import dependence has grown. Annual gasoline imports increased from 20.4 million barrels in 2023 to 28.2 million barrels in 2024 and 58.8 million barrels in 2025. The CEC noted that imports, inventories, and remaining refineries had maintained supply through recent capacity losses but also acknowledged that each loss leaves less spare capacity to absorb subsequent disruptions and places greater demands on ports, terminals and pipelines.

For CIPA, successfully managing previous losses does not establish that continued refinery attrition is sustainable. An assessment should distinguish between preparing for additional imports when necessary and accepting increased import dependence as the preferred outcome. California needs a strategy to preserve domestic supply capabilities as well as a plan for replacing them if they disappear.

Include Diesel and Aviation Fuel

During the discussion, CEC staff acknowledged that the current assessment approach does not include aviation fuel or diesel. CIPA encouraged the commission to incorporate data and analysis covering all three major transportation fuels rather than concentrating on gasoline alone.

California refineries manufacture multiple products through integrated operations. A gasoline-centered assessment risks overlooking the broader consequences of refinery closures or operating constraints for freight transportation, agriculture, construction, air travel, and other essential activities.

A more complete assessment should examine demand, production capacity, import requirements, and disruption risks for gasoline, diesel, and aviation fuel together. It should also evaluate how proposed policies affecting one fuel could influence the availability and economics of the others.

Test Import Reliability Against Global Competition

CIPA asked the CEC to study California’s exposure to competing international demand for seaborne crude oil. The central question is whether replacement supply will remain available, affordable, and deliverable when other countries are competing for the same cargoes and vessels.

A supply plan cannot assume that a barrel available somewhere in the world will necessarily reach a California refinery when needed. The assessment should test scenarios involving simultaneous demand increases, overseas supply disruptions, constrained vessel availability, and higher freight costs. It should distinguish between the availability of crude cargoes for California refineries and finished-fuel cargoes needed to replace lost refining output.

The CEC’s presentation provides a useful starting point. It identifies global supply constraints, vessel availability, voyage times, shipping economics, terminal capacity, and inland distribution as essential considerations. It also notes that California lacks a refined-product pipeline connection to major outside producing regions, that Northern and Southern California are not directly connected by product pipeline, and that replacement supply largely arrives through a limited number of marine terminals. CIPA urged the agency to carry those vulnerabilities through to its policy recommendations.

Timing Remains Uncertain as Administration Changes Approach

CEC staff indicated that completing the assessment by January 2027 may not be feasible, particularly with a new governor taking office. The incoming administration’s priorities, including direction provided during the transition between the election and inauguration, could affect both the report’s schedule and its recommendations.

The CEC anticipates revisions in November and December, leadership and administration review in December and January, a draft report in early 2027, and final publication and adoption later in the year. Several analytical components remain under development, including marine import capacity, infrastructure investment needs and cost-benefit comparisons among options.

CIPA’s message was clear: The final assessment should provide a practical roadmap for maintaining California’s ability to produce crude oil and manufacture the transportation fuels its economy requires. Expanding responsible local production, preserving operating refineries and assessing gasoline, diesel and aviation fuel together would give the incoming administration a stronger foundation for decisions on affordability and energy security.