California Refineries Warn of Possible Exits Amid Regulatory Pressure

Assembly Democrats and Nevada's governor oppose proposed state regulations that could impact fuel supply and costs.

Mar. 11, 2026 at 2:21am

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California regulators are facing growing pressure to reconsider proposed changes to the state's cap-and-invest program that would reduce permits and increase fees for major polluters like oil refineries. Industry leaders warn the amendments could force refineries to shut down or leave the state, threatening fuel supply and raising energy costs. Some Democratic lawmakers who previously supported the climate policies are now urging regulators to slow down the transition, citing concerns about worsening costs for consumers.

Why it matters

California's refining capacity has already been shrinking, with recent facility closures eliminating about 20% of the state's gasoline supply. The proposed regulatory changes could exacerbate this issue, potentially leading to fuel shortages and higher prices not just in California, but also in neighboring states like Nevada that rely on California's refineries. This debate highlights the challenges of balancing ambitious climate goals with ensuring energy affordability and reliability.

The details

The proposed amendments to California's cap-and-invest program would reduce the number of permits available for major polluters while increasing fees. Energy companies warn these changes could push refineries out of the state, as they would put California refineries at a competitive disadvantage compared to imported fuel that would not be subject to the same fees. Industry groups argue the state's regulatory environment has been building for decades, and the conflict in Iran has only exacerbated the problem.

  • In the last year, two California refineries have shut down, eliminating about 20% of the state's gasoline supply.
  • The California Air Resources Board (CARB) has proposed the amendments to the state's cap-and-invest program.
  • On March 11, 2026, Nevada's Republican Governor Joe Lombardo submitted a letter opposing the proposed CARB rules, citing concerns about availability, pricing, and economic stability in his state.

The players

California Air Resources Board (CARB)

The state agency overseeing California's cap-and-invest program and the proposed amendments that have drawn industry opposition.

Andy Walz

President of refining operations at Chevron, one of the major oil companies warning about the potential impacts of the proposed CARB rules.

Jodie Muller

The new CEO and president of the Western States Petroleum Association, an industry group opposing the proposed regulations.

Joe Lombardo

The Republican governor of Nevada, who submitted a letter opposing the proposed CARB rules due to the potential impacts on his state's fuel supply and prices.

Lori Wilson

Chair of the California State Assembly Transportation Committee, who said lawmakers want to ensure regulations do not worsen costs for drivers.

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What they’re saying

“I don't know what more of an alarm bell you need to have two refineries shut in less than a year in California. They should declare an emergency. We should sit down and figure this stuff out.”

— Andy Walz, President of refining operations at Chevron (abc10.com)

“There have been decades of policies compiled on top of each other that have really led to the position that we're in right now.”

— Jodie Muller, CEO and president of the Western States Petroleum Association (abc10.com)

“What we know we do not want is our regulatory environment creating additional costs for consumers.”

— Lori Wilson, Chair of the California State Assembly Transportation Committee (abc10.com)

What’s next

The California Air Resources Board will need to decide whether to move forward with the proposed amendments to the cap-and-invest program in the face of growing opposition from industry and some Democratic lawmakers.

The takeaway

This debate highlights the delicate balance California must strike between its ambitious climate goals and ensuring energy affordability and reliability for consumers. As the state navigates this transition, policymakers will need to carefully consider the potential impacts on fuel supply, prices, and the broader economy.