Rising US Refinery Fire Incidents: Implications for Energy Infrastructure Resilience

The United States is grappling with a surge in refinery fire incidents, a trend that has intensified since 2017 and reached a critical inflection point in 2025. According to a Reuters report, the Gulf Coast region alone has experienced multiple high-profile fires at facilities operated by Chevron, Valero Energy, and Marathon, with incidents like the October 2025 Chevron El Segundo refinery fire disrupting jet fuel supplies to Los Angeles International Airport. These events underscore a systemic vulnerability in aging infrastructure, compounded by regulatory rollbacks and the accelerating energy transition. For investors, the implications extend beyond operational risks to encompass insurance cost dynamics, environmental liabilities, and the long-term viability of fossil fuel assets.

The Perfect Storm: Aging Infrastructure and Deregulation

The root causes of the fire surge are deeply intertwined with policy and infrastructure decay. Data from Rucksense Substack reveals that the number of refinery fires and explosions nearly quadrupled between 2019 and 2024 compared to the prior six years. This spike coincides with the Trump administration's 2018 rollbacks of the Chemical Disaster Rule, which weakened safety oversight and reduced third-party audits at industrial facilities. For example, the March 2025 fire at Valero's Corpus Christi refinery was linked to outdated equipment and insufficient maintenance protocols, according to the Rucksense analysis. Such incidents highlight a dangerous disconnect between regulatory frameworks and the realities of aging infrastructure, with the Gulf Coast-home to 55% of U.S. refining capacity-bearing the brunt of the crisis, per EIA data.

The economic and environmental toll is equally alarming. A single refinery fire can release toxic pollutants like benzene and sulfur dioxide, endangering nearby communities and straining emergency response systems, the Rucksense analysis notes. Meanwhile, disruptions at key hubs like Chevron's El Segundo facility-which supplies 40% of southern California's jet fuel-can ripple through regional energy markets, temporarily spiking prices and exposing supply chain fragility, as detailed in the Reuters report.

Insurance Risk Exposure: A New Era of Uncertainty

The insurance industry is now recalibrating its risk models to account for the dual pressures of physical and transition risks. According to KPMG's 2025 analysis, insurers are increasingly reluctant to underwrite large coverage limits for carbon-intensive industries, with some capping policies at $20 million due to climate-related litigation risks and social inflation. The downstream energy sector has already faced two major claims in 2025, including the Chevron El Segundo and Martinez refinery fires, which together could exceed $1.5 billion in losses, per Insurance Insider. These events have forced insurers to reevaluate underwriting discipline, with carriers pulling back on auto liability and excess liability coverage while expanding capacity in renewable energy projects, as described in the RPSins 2025 update.

The energy transition itself introduces new complexities. Renewable infrastructure, such as solar farms and wind turbines, presents decentralized risk profiles that traditional models struggle to quantify, KPMG's analysis argues. Insurers are responding by integrating physics-based modeling and resilience assessments, but gaps remain in data availability for emerging technologies. For instance, solar energy faces unique challenges from hail losses, while offshore wind projects require specialized underwriting for marine risks, according to the RPSins update.

Market Dynamics: Premium Trends and Alternative Risk Transfer

The 2025 insurance market reflects a mixed landscape. Property insurance for high-quality risks has softened due to low 2024 losses, but liability segments-particularly in oilfield services-remain strained by rising claim frequencies, the RPSins update finds. Energy companies are increasingly turning to captives and insurance-linked securities (ILS) to fill coverage gaps. Captives, for example, allow firms to retain higher risk layers and access alternative capital, a strategy highlighted at RISKWORLD 2025 and discussed in the KPMG analysis.

However, the broader market is constrained by macroeconomic headwinds. Moody's notes that social inflation and geopolitical instability are driving up claims costs, while climate change amplifies exposure to extreme weather events like hurricanes and wildfires, as summarized in the Risk Strategies outlook. For refineries, the 2025 hurricane season has added urgency to risk mitigation, with insurers demanding enhanced resilience measures to offset potential outages and supply chain disruptions, the EIA analysis observes.

Investment Implications: Balancing Transition and Resilience

For investors, the convergence of refinery fire risks and energy transition challenges demands a nuanced approach. Companies that prioritize infrastructure modernization and proactive safety audits-such as those adopting advanced monitoring technologies-may outperform peers reliant on aging assets. Conversely, firms with weak ESG profiles or exposure to high-risk regions could face escalating insurance premiums and regulatory scrutiny.

The insurance sector itself presents opportunities. Insurers leveraging ILS and captives to manage energy transition risks are well-positioned to capitalize on market gaps, while reinsurers with expertise in climate modeling may gain a competitive edge. However, investors must remain cautious about the long-term viability of fossil fuel assets, as transition risks and public sentiment shifts could accelerate divestment trends.

Conclusion

The rise in U.S. refinery fires is not merely an operational crisis but a symptom of deeper systemic challenges. As the energy transition accelerates and insurers grapple with evolving risk paradigms, the resilience of energy infrastructure-and the financial instruments that underpin it-will be tested like never before. For investors, the path forward lies in balancing short-term profitability with long-term sustainability, ensuring that both energy producers and insurers are equipped to navigate an era of heightened uncertainty.