News Summary

California is preparing for a significant increase in gas prices, with projections suggesting prices could reach $8.43 per gallon due to the upcoming closures of two major oil refineries. These closures are expected to decrease the state’s refining capacity by nearly 20%, leading to economic strain on working families and various industries reliant on stable fuel costs. Analysts express concerns about the long-term impact on the state’s economy and energy stability.

California is bracing for a potential surge in gas prices, with projections indicating that prices could rise as high as $8.43 per gallon following the planned closures of two major oil refineries by 2026. The impending closures of the Phillips 66 refinery in Los Angeles and the Valero refinery in Benicia are expected to cut the state’s refining capacity by nearly 20%.

According to an analysis conducted by a professor at the University of Southern California, the first refinery’s closure could see gas prices jump to approximately $6.43 per gallon. The second closure is predicted to escalate prices even further to $8.43. The forecast may worsen if the state enacts stricter fuel standards, permits gas tax increases, or reauthorizes the Cap-and-Trade emissions credit program, all of which could contribute to increased fuel costs.

This situation threatens California with a significant economic crisis, mainly due to the heightened fuel prices that could severely strain working families. Multiple industries are likely to be impacted, including air travel, food delivery, and healthcare, which rely heavily on stable fuel prices.

Current Fuel Economy in California

Despite the growing concerns over fuel supply, California has seen a decrease in fuel consumption since 2001, with usage dropping by about 11%. This reflects a declining demand for gasoline in the state, contradicting the imminent supply issues expected from the refinery closures. Already, California’s gas prices rank among the highest in the United States, typically standing more than a dollar over the national average.

Impact on Employment and State Economy

The Phillips 66 and Valero refineries collectively employ around 1,300 workers directly and sustain an additional 3,000 jobs throughout the state. The loss of these jobs could exacerbate an already challenging economic landscape for working families in California.

Political Responses and Regulatory Climate

Political leaders have taken notice of the impending closures, with some critics attributing blame to policies enacted by the state, including those implemented by Governor Gavin Newsom. These individuals argue that such policies have financially destabilized refinery operations within California. There has been no response from Newsom’s office regarding these criticisms.

The closures are also anticipated to elevate California’s dependence on out-of-state and foreign oil sources, raising concerns about national energy security. Legislative actions aimed at addressing high fuel prices have been attempted but remain clouded by ongoing tensions between oil companies and state regulators over who is responsible for the rising costs consumers face.

Current Gas Price Observations

As of recent reports, gas prices in California average around $4.85 per gallon, reinforcing the state’s reputation for elevated fuel costs. With potential refinery closures on the horizon, analysts and economists urge policymakers to carefully consider the consequences of their decisions on the state’s economy and energy landscape.

The implications of these refinery closures are profound, not only for consumers who may face steep fuel price increases but also for the broader economic health of California. The situation highlights the delicate balance between environmental policies, energy production, and economic stability.

California Faces Surge in Gas Prices Amid Refinery Closures

News Summary

Current Fuel Economy in California

Impact on Employment and State Economy

Political Responses and Regulatory Climate

Current Gas Price Observations

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Author: HERE Hollywood