Phillips 66 will begin shutting down its 139,000 bpd Los Angeles-area refinery as soon as next week, sources told Reuters, moving forward on a closure plan announced last year. Units at the plant will idle in phases through Q4 2025, with the facility permanently offline by year-end.
The decision isn’t a surprise—Phillips 66 said in October it would exit the site, citing “market dynamics.” But it comes with fallout: about 600 employees and 300 contractors will lose their jobs by December, with only a handful reassigned to the company’s marine terminal. The company insists it will support workers through the transition, though local officials remain worried about the economic hit.
California, meanwhile, is staring at a bigger problem. Between Phillips 66’s LA facility and Valero’s Benicia refinery, scheduled to close in 2026, the state is set to lose roughly 17% of its refining capacity. That’s a dangerous haircut in a state already paying the nation’s highest pump prices. Analysts warn that by late 2026, California gasoline could top $8 a gallon if supply disruptions collide with fewer in-state refineries.
Lawmakers appear caught flat-footed. California has prided itself on leading the clean energy charge, but the state has no system-wide transition plan to manage a shrinking refinery fleet. Imports will plug some of the gap, but relying on tankers means higher costs and more emissions at the ports. For now, policymakers are scrambling to balance climate ambition with the political pain of $6-plus fuel.
The closure also lands as Phillips 66 wrestles with other headaches. Earlier this month, a California court hit the refiner with an $800 million judgment in a biofuels trade secrets case, and earlier this year, activist hedge fund Elliott Management pressed the company to spin off assets to boost shareholder value.
In the end, the LA refinery shutdown is part of a larger trend. Refining is being squeezed worldwide by overcapacity, shifting demand, and environmental rules. But in California, the lack of a clear bridge plan means refinery retirements risk sparking exactly the kind of fuel crunch the state wanted to avoid.
By Julianne Geiger for Oilprice.com
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