California is running out of refineries – and running out of time

1. With the onset of the Iranian war, crude oil supplies being shipped through the strait of Hormuz were cut off to the Asian countries that were supplying California with transportation fuel. This forced the Asian Refineries to reduce their crude oil charge rates. As the crude oil charge rates declined their production rates of the vital fuels for California also declined to the point where they were forced to suspend their shipments to our state. By the first week of April 2026 nearly all outbound fuel shipments were cut off. With transit times across the Pacific Ocean running between 35 – 45 days this set California on a course for a supply shock starting in the last week of May 2026 with subsequent transportation fuel shortages at the terminal and fuel station levels starting in mid to late June 2026.
2. To help California, Gulf refineries bumped up their production rates from a normal of 95-96% to near 98% of capacity. Some refineries also deferred their scheduled 1^st and 2^nd quarter maintenance shutdowns known as turnarounds to keep production online. Despite the slight increase in refinery rates most of the fuel that has been supplied to California has come from Petroleum Administration Defense District 1 (PADD 1) from the Gulf Coast and PADD 3 from the East Coast. In essence, California policies have caused the state to tap into other national military reserves. Refineries deferring their scheduled turnarounds is hazardous. Turnarounds are scheduled for a reason. Every day of delay further increases the possibility of extended downtimes due to equipment fouling or uncontrolled shutdowns due to equipment failure.

California State policies and economics have caused most of the in-state refineries to close over the last few decades and cease doing any manufacturing in the State which directly relates to transportation fuel shortages. The remaining seven refineries do not have the capacity to manufacture the supply chain demands for 58 million gallons a day of transportation fuels, and the bunker fuel demands of ships at 3 of the busiest ports in America located in California.

California is continuously increasing its reliance on costly foreign fuel imports from major polluting foreign refineries that ship those fuels long distances for 30 to 45 days across the Pacific Ocean by polluting tankers before reaching California ports. Because California's unique environmental regulations require highly specialized fuel blends, and the domestic tanker fleet is too thin to fulfill its immense volume requirements, the state will be forced to look abroad. Refiners and marketers like those in the California Fuels & Convenience Alliance will likely pivot to importing replacement components from international markets, leaving California more exposed to global supply shocks and high replacement costs. However, given the current global supply strains, it is unlikely that they will find replacement transportation fuel sources. This will most likely lead to supply shocks within the state and the strong possibility of shortages of the daily transportation fuels that are demanded within the State.

Governor Newsom has received three letters from Chevron, Marathon, and PBF, owners of six of the remaining seven refineries in the state. All three letters state that if California refuses to negotiate with them on the newly proposed Cap and Invest amendments that were drafted by the California Air Resources Board (CARB), then they will seriously consider shuttering their operations and leaving the state like Valero did.

California's Governor, Legislatures, Senators and Representatives must immediately implement plans to support the retention of the 7 remaining refineries. If these refiners shut down, then no amount of waiver tankers will be able to prevent current shortages from becoming humongous catastrophic shortages. These shortages will be of historical proportions. They will affect Nevada, Arizona, and if the ports are shut down, they will reach well into the center of the nation.

California is not proactively supporting the reanimating of the closed Valero Refinery in Benicia or the closed Phillips Refinery in Wilmington. In addition, California government is not making the necessary policy changes to avert the hemorrhaging loss of one or more of the remaining California Refineries.

We strongly encourage the President to immediately invoke the Defense Production Act (DPA) of 1950 which is a United States federal law that gives the President emergency powers to control domestic industries and private businesses. It ensures the nation has enough industrial resources and supplies for national defense, energy infrastructure, and major emergencies.