Key Points
- California’s fuel prices are $1 higher than the national average.
- New state law requires oil refiners to maintain fuel inventories.
- Phillips 66 plans to end crude oil refining in California.
According to a U.S. Energy Information Administration (EIA) research issued Monday, California’s fuel market, where gasoline prices often surpass the national average, is facing increasing difficulties that have led to new state legislation and an imminent refinery closure.
California fuel prices remain over $1 higher than U.S. average
AAA data shows that the average retail price for a gallon of regular gasoline nationwide was $3.018 as of December 9. The average retail price of gasoline in California, on the other hand, was $4.365 a gallon, which was more than $1 more than the national average. Fuel costs in the state have continuously been among the highest in the nation.
According to Oil price, California has typically maintained lower inventory levels than the rest of the nation, according to the EIA, even though a number of factors, such as higher crude oil and refining costs on the West Coast, contribute to higher retail gasoline prices in the state.
In October, Governor Gavin Newsom approved legislation to stabilize the fuel supply in response to the price fluctuation of gasoline. In order to avoid supply shortages, the California Energy Commission (CEC) is now able to mandate that oil refiners maintain minimum inventory levels thanks to a new law called ABX2-1.
Additionally, it enables the CEC to modify the necessary storage amounts according on refinery size, storage capacity, and seasonal and regional market conditions. The CEC may also look into using a tradable system, akin to California’s Low Carbon Fuel Standard (LCFS), to ensure compliance with the minimum inventory law.
Phillips 66 to close Los Angeles refinery by 2025
Phillips 66 declared that it would cease refining crude oil at its Wilmington refinery in Los Angeles, which produces 139,000 barrels per day, by the fourth quarter of 2025, shortly after the law was approved. Phillips 66 admitted that the refining environment in California is getting harder for operators, even if the firm said the ruling was not a direct reaction to the new law.
Phillips 66 has previously converted its refinery in San Francisco into a facility that produces renewable diesel. Phillips 66 will cease all of its crude oil refining activities in California with the scheduled shutdown of the Wilmington refinery, highlighting the state’s refining industry’s overall change.
