California Gas Prices Could Surge to $8.43 Amid Refinery Closures

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California faces soaring gas prices with potential surges to $8.43 due to refinery closures.

News Summary

California is facing a potential gas price surge, with projections indicating prices could rise to $8.43 per gallon following the planned closures of two major oil refineries. The closures threaten to eliminate 20% of the state’s refining capacity, raising concerns over economic strain on families and businesses. Current gas prices are already higher than the national average. Experts warn that ongoing state policies may further exacerbate these challenges, leading to increased reliance on out-of-state oil and potentially compromising national energy security.

California faces a potential gas price surge that could see prices rise to as much as $8.43 per gallon due to the planned closure of two major oil refineries, Phillips 66 in Los Angeles and Valero in Benicia, by 2026. The closures are expected to eliminate approximately 20% of California’s refining capacity, significantly impacting fuel prices and availability.

An analysis conducted by a professor at the University of Southern California indicates that gas prices may increase to $6.43 per gallon following the first refinery’s closure. Should both refineries cease operations, the price could escalate further to $8.43. Additional price hikes could occur if California enacts stricter fuel standards, introduces gas tax increases, or reinstates the Cap-and-Trade emissions credit program, which has been a point of contention among legislators.

The anticipated increase in gas prices raises concerns about an economic crisis within California, as soaring fuel costs could place undue strain on working families and affect various sectors, including air travel, food delivery, and healthcare services. Current average gas prices in California already hover around $4.85 per gallon, significantly higher than the national average, which often exceeds California’s prices by more than a dollar.

The closures of Phillips 66 and Valero refineries will not only affect fuel costs but also impact employment, directly involving approximately 1,300 workers while supporting an additional 3,000 jobs statewide. Critics of the closures, particularly those in political opposition, have blamed state policies for making refinery operations less economically viable. They contend that state leadership has contributed to the deteriorating implications for local refining capacity and its related workforce.

California has been experiencing a trend of reduced fuel consumption, with a decrease of about 11% since 2001. This decline indicates a waning demand for gasoline in the state, which may exacerbate supply issues as refineries close their doors and the remaining operational facilities struggle to meet lower consumption rates.

With the forecasted changes in refining capacity, California’s reliance on out-of-state and foreign oil is poised to increase. Such a shift could compromise national energy security, raising further alarm among policymakers and citizens alike as they consider the potential implications of fewer domestic refining options.

Despite legislative efforts aimed at curbing exorbitantly high fuel prices, ongoing tensions persist between oil companies and state regulators over responsibilities for rising costs. The recent movements toward stricter regulatory frameworks may signal a challenging route ahead for consumers concerned about fuel prices and economic stability.

The possible closure of crucial supply channels via the Phillips 66 and Valero refineries points toward a turbulent future for California drivers, consumers, and businesses. With the likelihood of increased gas prices looming large, California faces a critical juncture requiring immediate attention to avert financial strain on its residents and ensure the state’s economic resilience.