We used to visit Robert Rapier at his Energy site, here he is writing at Forbes, May 8:
On the heels of my recent article outlining how California’s unique fuel regulations — not corporate price gouging — are driving up gasoline prices in the state, new developments have added urgency to that conversation.
On May 6, California Senate Minority Leader Brian W. Jones (R-San Diego) sent a letter to Governor Gavin Newsom sounding the alarm over what could become an energy and economic crisis in the state. Citing an analysis by University of Southern California professor Michael Mische, the letter warns that gas prices could spike 75% by 2026 — reaching as high as $8.43 per gallon — if two major refineries are allowed to shut down as planned.
This follows Professor Mische’s earlier study, which I referenced in my prior article. His research identified structural factors and policy-driven costs as the primary reasons California gasoline prices are consistently the highest in the nation — not oil company profiteering. These factors include high state taxes, a boutique fuel blend required only in California, and an increasingly constrained refinery landscape.
A Looming Supply Crunch
Two key in-state refineries are scheduled to close in the coming months: the Phillips 66 refinery in Los Angeles by the end of 2025, and the Valero refinery in Benicia by April 2026. Together, these facilities produce approximately 20% of California’s gasoline supply.Professor Mische’s projections are stark. He estimates that gas prices could reach $6.43 per gallon after the first closure and climb to $8.43 by the end of 2026 after the second. These numbers assume stable crude oil prices. But if global oil markets turn volatile — as they often do — the ceiling could be even higher.
What’s Driving the Closures?
Refining gasoline in California has become increasingly difficult. The state’s stringent environmental rules, such as the Low Carbon Fuel Standard (LCFS), coupled with recent legislation like SBX1-2 and ABX2-1, have layered on costly compliance burdens. Add in uncertainty around future bans on internal combustion vehicles and a hostile investment environment, and it’s not hard to see why refinery operators are opting to exit the state.
The problem isn’t limited to fuel prices. According to Senator Jones’ letter, the closures would also eliminate around 1,300 direct jobs and nearly 3,000 more indirectly. These are good-paying, union and trade jobs in communities that can ill afford the loss. Beyond economics, the closures also increase the state’s reliance on imported fuel — most of which must be transported by ship — raising logistical risks and, arguably, national security concerns.Why This Matters...
....MUCH MORE
Related:
May 9 -"California gas prices soar after one of Bay Area's few refineries catches fire"
April 17 - "Valero books $1.1 billion impairment, may idle California refinery" (VLO)
Moving closer and closer to the dream of mass transit Cali. and/or 'You will own nothing' and enjoy walking.*
Previously:
October 19, 2024 - "Oil company Phillips 66 says it will shut down Los Angeles-area refinery" (PSX)
October 29, 2024 - Valero Could Be Next To Shutter California Oil Refineries
In other words: "Drop off the key, Lee", "Hop on the bus, Gus," "Make a new plan, Stan...." (apologies to transit planner Paul Simon)
*But maybe it's just me."The problem is all inside your head"
She said to me
"The answer is easy if you
Take it logically"
Here's USC Marshall School of Business' Professor Mische via Scribd:
A Study of Califiornia Gasoline Prices March 2025 by Rob Nikolewski
