California Fuel Market Faces 'Breaking Point' as Refineries Close

State senator warns of higher gas prices, job losses, and volatility as refinery capacity shrinks

Published on Feb. 11, 2026

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California's fuel market is under strain as refinery capacity continues to shrink in the nation's largest gasoline market. The planned closure of Valero's Benicia refinery, one of the state's remaining major facilities, is expected to tighten supply and lead to higher prices, job losses, and increased volatility across the state's fuel market, according to lawmakers.

Why it matters

California's reliance on a shrinking number of refineries has made the state's fuel market increasingly vulnerable to disruptions, with even routine maintenance or unexpected outages quickly rippling through prices at the pump. Critics argue that years of regulations and penalties have discouraged long-term investment in refining infrastructure, accelerating closures and amplifying price swings for consumers.

The details

The Benicia facility has played a significant role in supplying gasoline to California, which consumes more fuel than any other state except Texas. Its closure follows a wave of refinery exits that has steadily reduced the state's ability to produce its own gasoline, leaving it increasingly dependent on a small number of remaining plants and imported fuel that must meet its unique regulatory standards.

  • Valero's Benicia refinery is expected to close in the near future.

The players

Valero

An oil refining company that operates the Benicia refinery in California, one of the state's remaining major fuel production facilities.

Suzette Martinez Valladares

A Republican state senator in California who has warned that the state is at a "breaking point" due to refinery closures and shrinking fuel supply.

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What they’re saying

“California is truly at a breaking point. Refineries are closing, supply is diminishing, and my constituents are paying more at the pump every single day.”

— Suzette Martinez Valladares, California State Senator

What’s next

State lawmakers are expected to continue discussing policy solutions to address the tightening fuel market and rising gas prices in California.

The takeaway

The closure of the Benicia refinery and the broader trend of refinery exits in California have left the state's fuel market increasingly vulnerable to disruptions, leading to higher prices and volatility for consumers. This highlights the need for policymakers to find a balance between environmental goals and ensuring a stable and reliable fuel supply for the state.