Gas prices at a Pilot Dealer gas station along 40th Street in Chandler on May 16, 2025.
San Diego, California – California drivers may soon face steep increases at the pump as two of the state’s largest oil refineries prepare to shut down operations—one in the Bay Area and another in Los Angeles County. Experts expect the impending closures to tighten fuel supply and significantly drive up gas prices, with some projections suggesting prices could reach as high as $8.43 per gallon by the end of next year.
The Valero Benicia Refinery in the East Bay is scheduled to close in April 2026. Meanwhile, the Phillips 66 refinery in Southern California is expected to cease operations within the following year. Together, these closures are projected to reduce California’s in-state gasoline production by approximately 21%, removing millions of gallons from the daily supply.
Currently, gas prices in some parts of the state, such as Walnut Creek, are approaching $5 per gallon, with some drivers already spending over $100 to fill their tanks. If demand remains steady and these refineries close as planned, fuel costs could surge dramatically. Estimates suggest that prices rise to between $6.04 and $6.43 per gallon in 2025, with a potential increase to between $7.34 and $8.43 per gallon by the end of 2026.
The state’s push toward clean energy and reduced emissions is a key factor in the refinery shutdowns. California has set an ambitious goal to ban the sale of new gas-powered cars by 2035. While intended to cut greenhouse gas emissions, critics argue that these measures risk creating affordability challenges, particularly if fuel supply drops faster than alternative transportation becomes accessible.
Some lawmakers have raised concerns that shutting down major refineries without sufficient planning could place a heavy financial burden on Californians. There are calls for immediate action to mitigate the economic impact, including exploring policy changes such as regulatory exemptions, tax incentives, and coordination with federal agencies.
In response to growing concerns, the Governor’s office has pointed to recent state efforts to stabilize gas prices and hold oil companies accountable. California’s gas price gouging law, enacted in 2022, created a state-level petroleum watchdog and increased transparency across the industry. Officials argue that these steps have helped prevent significant price spikes seen in previous years.
Nevertheless, with two major facilities set to go offline and no replacement infrastructure in sight, California is facing a future of reduced fuel production and potentially record-breaking gas prices. The situation underscores the challenge of balancing environmental goals with economic realities as the state continues its transition away from fossil fuels.
