California Faces Fuel Supply Crunch as Refinery Closures Loom

State lawmakers warn of higher gas prices and job losses as the state's refining capacity continues to shrink

Published on Feb. 12, 2026

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California's fuel market is entering another period of 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 in a system that already operates with little margin for disruption. State lawmakers warn the situation is no longer theoretical, with constituents paying more at the pump every day.

Why it matters

California's reliance on a shrinking number of refineries has made the state's fuel supply increasingly vulnerable to disruptions, leading to price spikes and volatility for consumers. Critics argue that years of regulations and policies have discouraged investment in refining infrastructure, accelerating closures and amplifying the problem.

The details

The Benicia facility, located in Northern California, has played a significant role in supplying gasoline to a state that consumes more fuel than any other except Texas. Its closure follows a wave of refinery exits that has steadily reduced California's ability to produce its own gasoline, leaving the state increasingly dependent on a small number of remaining plants and imported fuel that must meet its unique regulatory standards. With fewer refineries operating, even routine maintenance or unexpected outages can quickly ripple through prices at the pump.

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

The players

Valero

An American multinational oil and gas company that operates the Benicia refinery in California.

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 rising gas prices.

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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, Republican state senator

What’s next

State lawmakers are expected to continue pushing for policy changes to address the refinery closures and fuel supply issues in California.

The takeaway

The shrinking refining capacity in California has left the state's fuel supply vulnerable to disruptions, leading to higher gas prices and volatility for consumers. This highlights the need for policymakers to find a balance between environmental goals and ensuring a reliable and affordable energy supply for the state.