Another refinery closure in California increases the states' dependency on China

Over the last several decades, California's passion to transition away from fossil fuels has overregulated and overly burdened just the SUPPLY of oil production and refining but has not reduced the increasing materialistic DEMANDS of the world for the more than 6,000 products and transportation fuels made from those fossil fuels. Thus, China is savoring the future with their many refineries coming online to meet the DEMANDS of society.

The recent announcement that the Valero Benica Refinery in Northern California will be closing by the end of 2026 was disappointing, but shockingly, a prelude to more closures in the future. The Valero refinery at Benicia represents almost 9% of the state's crude oil processing capacity to meet the materialistic demands of the States' residents.

Just last year, in October 2024, Phillips 66 announced that it would close its Wilmington-area refining complex this year, which will further reduce the state's gasoline, diesel, and aviation fuels production capacity, wiping out more than 8% of the state's crude oil processing capacity. Losing another 1.3 billion gallons in annual gasoline output will only worsen the state's supply challenges to meet the demands.

Governor Newsom's policies, just on the "supply" side of the equation, continue to force California, the 5^th largest economy in the world, to be the only state in contiguous America that imports most of its crude oil demands from foreign countries. California crude oil production is in terminal decline, driven by the lack of drilling permits, despite ample reserves. That dependence on foreign imports has increased imported crude oil from foreign countries from 5 percent in 1992 to more than 60 percent today of total consumption.

The West Coast gasoline, diesel, and aviation fuels market is isolated from other supply/demand centers as California is an energy island isolated from all States East of the Sierra Mountains. The Sierra Mountains are a natural barrier that prevents the state from pipeline access to any of that excess oil from fracking East of the Sierra Mountains. As such, the West Coast is susceptible to unexpected outages of West Coast refineries as it is unable to backfill an unexpected loss in supply of crude oil.

Because California is an isolated energy island market with no incoming oil pipeline connections over the Sierra Mountains from other states, in-state refinery closures will increase importation to meet demands for transportation fuels – sourced primarily from foreign countries like China, Saudi Arabia, Ecuador, Iraq, Columbia, and Russia.

California transportation fuel demands have staggering numbers from the in-state refineries:

• With all its 145 airports, inclusive of 9 international airports and 41 military airports, that demand 13 million gallons of aviation fuel daily. In 2019, California consumed 16.7% of the national total of jet fuel, making it the largest consumer of jet fuel in America.
• For its 30 million vehicles, California is the second-largest consumer of motor gasoline among the 50 states consuming 42 million gallons a day of gasoline, just behind Texas.
• Diesel fuel is the second largest transportation fuel used in California, consuming 10 million gallons a day of diesel to support the state's 35 million registered vehicles.
• California refineries supply 45% of Arizona's and 88% of Nevada's transportation fuels, so any disruption in California impacts all three states.
• California's northern and southern fuel supply systems are not connected, requiring ocean-going vessels to transport fuel between them.

The efforts of California toward the oil production and refining "supply" have had minimal impact on the growing materialistic "demands" of what is made from those fossil fuels.

• The mandating for a transition to EV's has had minimal impact on gasoline consumption as most EV's are second vehicles for low milage usage. The workhorse vehicles for major milage demands are still reliable and affordable internal combustion engines.
• Hospitals and airports continue expanding to meet the demands of society. Both hospitals and airports did not exist 200 years ago as they only exist today because of the more than 6,000 products and transportation fuels made from fossil fuels.

Today, Asia is the region with the greatest number of future petroleum refineries. As of 2021, there were 88 new refinery facilities in planning or under construction in Asia for manufactured gasoline, diesel, and aviation fuels used by every transportation infrastructure, and the military, as well as the manufactured oil derivatives that are the basis of most every product being used by mankind.

In the more immediate term, China has plans for multiple new refineries, with at least five projects expected to be completed by 2028, and another three new refineries by 2030, contributing to a broader shift towards integrated petrochemical facilities.