Phillips 66's Los Angeles Refinery Closure: Implications for Fuel Supply and Pricing

Oil company Phillips 66 recently announced its decision to shut down the Los Angeles-area refinery by the end of 2025, citing market concerns. This move, which will impact approximately 900 jobs, raises questions about the refinery's closure's impact on California's fuel supply and pricing dynamics.


The Los Angeles refinery produces about 8% of California's crude oil, according to the state's Energy Commission. Its closure will likely lead to a reduction in fuel supply, potentially driving up gasoline prices in the short term. However, the long-term effects on pricing remain uncertain, as Phillips 66 plans to replace the refinery's output with sources inside and outside its refining network, as well as with renewable diesel and sustainable aviation fuels from a San Francisco Bay area complex.


Phillips 66's commitment to renewable fuels factors into its decision-making process. The company aims to meet California's commercial and customer demands while transitioning towards more sustainable energy sources. This shift aligns with the state's climate leadership and policies aimed at phasing out fossil fuel-powered vehicles and reducing greenhouse gas emissions.

The refinery's closure may have potential environmental benefits, such as reduced air pollution and greenhouse gas emissions. However, it could also lead to drawbacks, such as increased reliance on imported fuels and potential disruptions in the local energy market. The state of California will need to adapt its energy policies to address the reduced crude oil production and fuel supply, ensuring a smooth transition towards a more sustainable energy future.