Petroleum giant Phillips 66 has announced it will shutter its Los Angeles oil refinery next year due to "long-term" uncertainty mere days after Gov. Gavin Newsom signed a law imposing strict new regulations on the state's refineries.
The pending closure comes during a tenuous time for the energy-starved state, Politico reported. A total of 8 % of California's refining capacity will be lost, leaving the state to look elsewhere to produce enough of high-test gasoline for its 31 million gas-powered vehicles.
"With the long-term sustainability of our Los Angeles Refinery uncertain and affected by market dynamics, we are working with leading land development firms to evaluate the future use of our unique and strategically located properties near the Port of Los Angeles," Mark Lashier, chairman and CEO of Phillips 66 said in a statement Wednesday.
"Phillips 66 remains committed to serving California and will continue to take the necessary steps to meet our commercial and customer demands," he added.
Newsom's latest legislative move is designed to prevent gasoline price hikes by granting the state authority to force refineries to store more gas and share resupply and maintenance plans with the state. During a press conference following a signing of the bill, Newsom accused the oil companies of "gouging" and "screwing" Californians by charging high prices.
Oil producers warned the measure will only increase the regulatory burden on refineries and harm consumers. "California prices are a reflection of policies designed to disincentivize liquid fuels and push fuel producers out of the market," said Susan Grissom, American Fuel & Petrochemical Manufacturers chief analyst. "There's a reason gasoline costs significantly more to make and supply in California than in Texas."
In response to the company's decision, California Energy Commission Chair Siva Gunda said in a statement that Phillips has been a "valuable partner in California's transition" and that the company's "plan to replace the production lost from the refinery closure is an example of the type of creative solutions that are needed as we transition away from fossil fuels."
"We remain dedicated to collaborating with industry leaders to secure an affordable and reliable fuel supply for all consumers as we move forward," Gunda added.
The Phillips 66 Los Angeles refinery is California's seventh largest. The closure will affect 600 workers and 300 contractors in the 650-acre facility in the fourth quarter of 2025.
The company said in its statement that it will continue to "supply gasoline from sources inside and outside its refining network as well renewable diesel and sustainable aviation fuels."