California Faces Fuel Disaster As Refineries And Gas Stations Shut Down

by Tyler Durden

Sunday, Dec 21, 2025 – 05:05 PM

The Democrat crusade to divert blame for the stagflation crisis triggered during the Biden Administration led them down a path of economic lies.  The central theme of their narrative was that corporations were “price gouging” consumers and inflation was actually a product of “corporate greed.”  In reality, helicopter money and dollar devaluation during the pandemic triggered a massive consumer demand rush as well as shortages in a variety of goods and raw materials.

The profit margins in many of these industries were paper thin as their manufacturing and labor costs skyrocketed, yet Democrats tried to scapegoat them anyway.  The word “accountability” is not in the leftist vocabulary.

We are only now starting to witness the aftermath of the legislation and policies put in place by blue states as a means to control prices.  California under Governor Gavin Newsom may have staged its own economic demise (the final nail in the coffin) after laws were passed requiring even greater state interference into oil refineries and gas stations.

Gavin Newsom ‘s major refinery law, ABX2-1 (signed Oct 2024), gives the state power to mandate minimum fuel storage levels and control refinery maintenance to prevent price spikes, empowering the California Energy Commission (CEC) to stabilize supply. This builds on earlier efforts (like SB X1-2) creating an oil market watchdog (DPMO) to increase oversight, aiming to stop refiners from manipulating supply for profit, while also adding data reporting requirements for companies.

In response, companies are shutting down refinery operations in the state.

Lawmakers in California at both the state and federal levels are warning that refinery closures could push prices higher while leaving the state more dependent on foreign oil.  At the center of the warning is the planned shutdown of two major refineries: Valero’s Benicia facility and Phillips 66’s Los Angeles plant. Together, the closures would eliminate nearly 20% of California’s in-state refining capacity.

Experts suggest prices could go as high as $10-$12 per gallon as a result of the supply squeeze, spreading outside of CA to Arizona and Nevada. Republican lawmakers say that the loss of in-state production threatens not only consumer prices at the pump but also the state’s military readiness; a matter of national security. 

The refineries make jet fuel and diesel and gasoline for military bases across California.  California is home to more than 30 military bases, many of which rely on fuel refined in-state.  Gavin Newsom has mostly dismissed concerns as exaggeration, asserting that foreign shipments of fuel will fill the supply gap.  He argued in a recent statement:

“The claim that California policies pose a national security risk isn’t grounded in fact. The state has proactively engaged defense fuel customers throughout this energy transition, and no credible concerns have been raised about future fuel supply for the military. California is leading this transition responsibly while ensuring families have access to a safe, reliable, and affordable supply of transportation fuels…” 

California law, primarily through Senate Bill 445, also mandates that all single-walled Underground Storage Tanks (USTs) and piping must be permanently closed or replaced with compliant double-walled systems by December 31st, 2025.  The claim is that this will prevent leaks and environmental contamination, with significant fines for non-compliance.

The state created a program called “RUST” to supposedly help small businesses meet the deadline by providing subsidies to pay for new tanks.  However, many mom-and-pop gas stations are reporting that they never received any aid from the RUST program, even though they applied far in advance.  Hundreds of small business gas stations in CA are set to shut down in 2026.  A large number of them are rural and operate as the only gas stations for long stretches of highway.  

In October, the newly created Division of Petroleum Market Oversight released its first annual report meant to discover why CA gas prices are so high.  The report merely confirmed what was already known – CA prices are much higher than other states because of the differential in taxes and regulatory costs.  No concrete evidence of price gouging on the part of energy companies was found.

Blue states like CA have been increasingly subjecting their citizens to an experiment in artificial energy scarcity; reducing access to “fossil fuels” while raising taxes to force consumers into the electric car market.  All of this is being done in the name of stopping “man-made global warming”, a problem which does not exist.  Newsom claims that he is trying to help CA citizens by lowering gas prices, but all of his actions are leading to a price explosion.