Valero and Phillips 66 Closures Signal a New Crisis for California’s Fuel Supply, Jobs, and Economic Future

The announcements of Valero’s plans to shutter its Benicia refinery by April 2026 and Phillips 66’s decision to close its Los Angeles facility later this year represent more than the loss of two major industrial sites. They are a direct consequence of California’s ongoing hostility towards the oil industry and a punitive and capricious regulatory environment that punishes local production and manufacturing.

These closures will eliminate a combined 309,000 barrels per day in refining capacity, which is nearly 20% of the state’s total. Once finalized, California will be left with only seven full-scale refineries to serve 39 million residents in the most car-dependent state in the country. While California consumes approximately 1.85 million barrels of oil per day, it will soon be refining significantly less than that in-state, increasing dependence on imported fuels from foreign nations with lower environmental standards and less accountability.

This is not about shifting market forces or declining demand. It is the result of state policies that have made operating refineries in California financially and logistically unviable. Key among them is ABX2-1, signed into law by Governor Newsom in 2024, which dramatically expanded state control over transportation fuels and imposed punitive measures on refiners under the guise of price-gouging prevention. Valley Congressman Vince Fong put it bluntly: “Our fuel supply is in jeopardy.”

But the threat isn’t limited to gasoline supply and affordability; it’s a broader economic crisis in the making.

The Valero refinery in Benicia alone contributes roughly $10 million annually through property and utility taxes, comprising nearly one-sixth of the city’s entire budget. Benicia Mayor Steve Young has already warned that essential services like police and fire will face sharp budget cuts. Across Northern California, the ripple effects will devastate working families, reduce local and state revenues, and further disrupt already stressed supply chains.

These refineries aren’t just industrial facilities but are economic anchors. The average job in California’s oil industry pays $123,000 annually, providing middle-class security for thousands of families and generating substantial income, sales, and property tax revenues that fund public education, infrastructure, and emergency response services. These wages and benefits are not easily replaced, certainly not in the short term through speculative “green job” transitions that cannot match the pay or stability of fossil fuel sector jobs.

Moreover, the shutdowns will impact a vast network of vendors, contractors, manufacturers, truckers, and support businesses. The small businesses that form the backbone of California’s supply chain stand to lose critical contracts and income, compounding the economic fallout.

California once had nearly 50 operating refineries. Today, that number is dwindling rapidly and will soon be approaching one-tenth that as the number creeps downward towards 5 refineries. As the industry collapses under Governor Newsom’s frontal assault with the billions of dollars in trust from people calling themselves “climate champions,” California becomes more vulnerable to price spikes, supply shocks, and geopolitical risk. Meanwhile, foreign oil producers, not California workers, are benefitting big time.

The question must be asked: when facilities like Phillips 66 and Valero leave, who steps in to fill the budget gaps? Who replaces the high-wage jobs? Who ensures energy reliability for 39 million Californians?

Every lost refinery represents not just a policy failure, but a deeper erosion of California’s middle class and energy sovereignty. If the state does not reverse course soon, the consequences will be felt for generations in higher costs, fewer jobs, and declining public services.

CIPA will continue to advocate for policies that prioritize energy affordability, job retention, and in-state oil and gas production. California cannot regulate its way out of this crisis, but it can choose to stop making it worse.