California Refinery Closures Could Push Gas Prices to $12 a Gallon

Lawmakers in California at both the state and federal levels are warning that refinery closures could drive fuel prices sharply higher while increasing the state’s dependence on foreign oil, Victoria Vesovski reported for Moneywise.

Valero, which has operated its 170,000-barrel-per-day Benicia refinery for roughly 25 years, said it will close the site in 2026 due to high operating costs and stringent state environmental regulations. (Photo: Valero)

At the center of the warning is the planned shutdown of two major refineries: Valero’s Benicia facility and Phillips 66’s Los Angeles plant.

Together, the closures would eliminate nearly 20% of California’s in-state refining capacity, according to Reps. Vince Fong and Stan Ellis, both Republicans from Bakersfield.

Valero, which has operated its 170,000-barrel-per-day Benicia refinery for roughly 25 years, said it will close the site in 2026 due to high operating costs and stringent state environmental regulations.

The company reportedly spent about $1 billion preparing to exit.

Fong said the impact could ripple far beyond the gas pump. “We have an energy crisis in our state, and it looks like it is only going to intensify,” he said, adding that reduced refining capacity could drive up fuel prices and disrupt California’s military supply chain.

What appears to be a consumer issue, he said, could quickly become a national one.

California already has the highest gasoline prices in the country. As of December 2025, drivers were paying about $4.34 per gallon statewide, according to AAA.