California’s fuel market is heading into a major shake-up. Two of the state’s nine gasoline-making refineries are shutting down by early 2026.
- Phillips 66 Los Angeles/Wilmington Refinery (139,000 bpd) started shutting down in October 2025 and will be fully idle by year-end.
- Valero Benicia Refinery (145,000 bpd) will close permanently by April 2026.
Together, that’s 284,000 barrels per day — around 17% of California’s entire gasoline production. These closures are happening because of strict regulations, high operating costs, and lower long-term demand for traditional fuel, making it harder for refiners to invest and continue running.
On November 13, 2025, Governor Gavin Newsom addressed these changes, highlighting environmental cleanup concerns and new actions from the state’s refinery-transition task force. Surprisingly, he also introduced a draft bill to expand drilling in Kern County to reduce supply risks and prevent even more closures.
For fuel jobbers and distributors, this isn’t just upstream news — it’s a true downstream stress test. California already deals with tight inventories, special fuel requirements, and limited connections to other refining hubs. With less in-state production, the state will depend more on fuel imports, which usually cost more, take longer to arrive, and are harder to predict.
What This Means for Jobbers and Distributors
You may see:
- Tighter product supply, causing sharper rack-price swings
- Higher sensitivity to outages at the remaining refineries
- More pressure on inventory planning, backup supply, and terminal-level monitoring
There are some long-term solutions in progress. In October 2025, Phillips 66 and Kinder Morgan opened bidding for the Western Gateway Pipeline Project, a 1,300-mile line from Texas to Arizona with possible flows into California. If it moves forward, it could help stabilize supply later in the decade.
The impact isn’t just on fuel markets. The Phillips 66 closure will displace around 600 employees and 300 contractors, affecting trucking fleets and industrial service companies — all major users of diesel, lubricants, and specialty oils. The Wilmington site may also be turned into a large mixed-use development, which could slowly shift local demand patterns.
The Bottom Line
This transition comes with risks — but also new opportunities. While some industrial consumption may dip, California’s shift toward renewable diesel, new fuel blends, and growing demand for value-added services creates room for jobbers and distributors ready to adapt. This moment reinforces one thing: resilient, forward-thinking distributors will remain essential as California’s fuel market evolves.
Based on information from Reuters, the EIA, company updates, and state officials.
Also Read:
- UAE Fuel Rates: Will Petrol Prices Drop in November?
- Europe’s Base Oil Imports from Bahrain & UAE Hit a New High
Editor-at-Large
A passionate writer in the lubricant industry, Awais Iqbal has been covering oils, greases, and industrial fluids since the start of his career. At 25, he’s already written for blogs, catalogs, and brand guides across the UAE. Awais’s insights help companies connect with their audience, and his clear, helpful writing style is trusted by brands in the region.
