California's Gas Prices Are Already Surging, and It's About to Get Worse!
The Valero oil refinery in Benicia, California, has officially ceased operations. According to Mike Ariza, a former Valero manager and seasoned oil and gas expert, the shutdown commenced on January 31st. Reports indicate the refinery is now completely cold, and crucially, the Crimson pipeline, which was instrumental in transporting crude oil from Southern California to the north, is also offline. Ariza starkly stated, "We are in an unprecedented oil crisis."
This development follows a series of significant shifts in California's energy landscape. Valero Energy Corporation had previously announced in April 2025 its intention to shut down the Benicia Refinery by April 2026. This news came on the heels of Chevron Oil Company relocating its operations to Houston, Texas, from the Bay Area, and Phillips 66 initiating the shutdown of its Los Angeles refinery in October 2025.
But here's where it gets controversial... Our oil experts had foreseen this move months ago, predicting that Valero seemed poised to close sooner than announced, and that gas prices were already on an upward trajectory. As USC Professor Michael Mische, an oil and gas expert, reported for the Globe in April, Valero cited low operating margins, escalating operating costs, and an increasingly stringent regulatory environment as key factors. This includes the state's mandated moratorium on the sale of internal combustion engine vehicles by 2035. Adding to these pressures, Valero had recently incurred an $85 million fine for "egregious emissions violations" from the California Air Resources Board (CARB) and the Bay Area Air Quality Management District. Consequently, Valero Energy Corporation formally notified the California Energy Commission (CEC) on April 16, 2025, of its plans to "idle, restructure, or cease refining operations at Valero’s Benicia Refinery by the end of April 2026." In anticipation of these changes, Valero has already recorded a $1.1 billion write-off related to asset impairments for its Benicia and Wilmington refinery operations.
In January, Governor Gavin Newsom addressed Valero's impending refinery shutdown. His statement, however, was met with criticism for its tone. He stated, "While others point fingers to spread fear and divide us, California is doing the actual work—collaborating with industry, using data and transparency to protect consumers, and building the all-of-the-nave energy future America needs. We’re in ongoing discussions with Valero to evaluate options for continued operations at the Benicia refinery and I appreciate the company planning responsibly, including planning for imports of refined products to supply the market in the meantime."
And this is the part most people miss... Governor Newsom's "clean energy all-electric future," which includes the ban on internal combustion engine vehicles, is precisely what has inflicted the most significant harm on the oil and gas industry. This is a point of contention for many.
Currently, the national average price for a gallon of gas stands at $2.89, while California's average is a staggering $4.25 and is continuing to climb. As the Globe reported in December, Governor Newsom appears to be overseeing one of the most substantial energy policy collapses in U.S. history, impacting the oil industry, refinery operations, and gasoline production. A significant report prepared by California Assemblyman Stan Ellis, Professor Michael Mische, and petroleum expert Michael Ariza warned that California's self-imposed gas crisis poses a direct threat to the military readiness of U.S. forces on the West Coast. Their findings revealed how Governor Newsom's energy policies are undermining domestic refining capacity, leaving West Coast military bases vulnerable to foreign adversaries like Russia and China. Their conclusion? Federal intervention is necessary.
Ariza elaborated to the Globe in December that Valero, which had initially planned to shut down its Benicia refinery in April 2026, has accelerated its closure to January. He explained, "The Phillips 66 refinery in Wilmington shut down on October 17th, taking 140,000 barrels per day of crude oil refining offline. Originally Valero in Benicia was slated to shut down in April of 2026. However, given the fact that they cancelled their crude oil contracts over six weeks ago it looks like they will be shutting down no later than January of 2026, four months ahead of schedule." He further noted that Valero isn't even attempting to sell the refinery, and despite state attempts to persuade them to remain open, they chose to shut down early due to "the state’s egregious regulations and unprecedented unjustified fines."
Ariza predicts that as refineries shut down, more Californians will likely leave the state. The oil and gas industry in California is a significant economic contributor, supporting 536,770 total jobs and directly employing 148,140 Californians, with a total economic contribution of $338 billion to the state's economy.
Notably, in January, the Globe reported that Nevada Governor Joe Lombardo announced the formation of a Fuel Resiliency Committee, a direct response to California's "radical and punitive energy policies." This highlights the widespread impact of California's energy decisions. Arizona receives nearly half of its gasoline from California, and a substantial 88% of Nevada's gas originates from the Golden State.
California currently produces less than 23% of its own in-state petroleum needs and imports over 65% of its crude oil from foreign sources. Despite this, the oil and gas industry still accounts for nearly 8% of the state's GDP.
Back in 1988, California imported only about 4.5% of its oil. By 2020, this figure had soared to over 70%. As Assemblyman Ellis, Professor Mische, and Ariza have warned, without a robust oil and gas sector, the remaining 92% of the state's GDP would be unsustainable.
Professor Michael Mische has cautioned that California could face gas prices as high as $8.43 per gallon as refineries continue to close. This prediction raises serious questions about the future of transportation and the economy in California.
What are your thoughts on California's energy policies and their impact on gas prices? Do you agree with the experts that federal intervention is needed? Share your opinions in the comments below!
