USC Professor Warns of Fuel Crisis Driven by State Policies

As the legislative session is set to end on September 12, 2025, University of Southern California professor Michael Mische is once again raising the alarm: California gas prices are on track to hit $8 per gallon by 2026, and policy, not profiteering, is the primary driver.

Two major refineries, Valero’s in Benicia and Phillips 66’s in Wilmington, are scheduled to shut down next year. Combined, they supply nearly 20 percent of California’s gasoline. According to Mische, the closures will tighten supply in a state already paying 40 percent more at the pump than the national average.

Valero cited California’s challenging regulatory environment as a reason for its exit, following an $82 million emissions fine. Phillips 66 pointed to long-term business uncertainty shortly after the state passed a law requiring refiners to stockpile finished gasoline.

Mische has noted that the closures are a direct result of California’s political and regulatory hostility, whose recent study forecasts $8 gas. He disputes the claims that oil companies are price gouging, arguing that California’s high prices are self-inflicted due to layers of taxes, fees, and the state’s unique fuel standards.

Mische also notes that California is forcing consumers toward electric vehicles too quickly while dismantling fuel infrastructure before the market is ready. EV sales have already declined this year, falling short of state mandates.

The economic impact will be substantial. In Benicia, Valero is the city’s leading employer and makes up 20 percent of its tax revenue. In Los Angeles, Phillips 66 plans to lay off 900 workers. Neighboring states like Nevada and Arizona, which depend heavily on California refineries, are also expected to experience price hikes.

Mische’s warning to state legislators: “We’ve legislated ourselves into a crisis.”