Ringside: California’s Refinery Capacity Stretched to the Limit

Even if Newsom allowed more oil to be drilled in California, we could not process it into gas.

“According to the California Energy Commission, in 2024 daily oil consumption in California averaged not quite 1.4 million barrels per day. Meanwhile, daily refinery capacity in California is just over 1.6 million barrels per day. There is a 16 percent buffer between how much oil we use every day, and how much oil we are capable of refining. That is changing fast.

If California’s refinery capacity is reduced and there’s a glitch, options are limited. There are no pipelines linking the state to other crude oil production and refining regions. If refined gasoline had to be imported, it would be impractical due to the need to transport it by ship to coastal terminals or send by rail in tank cars. And there are a limited number of out-of-state refineries equipped to produce the unique formulation required for gasoline sold in California.”

Democrats have been forcing the closure of refineries or not allowing new ones to be built.  Result?  Go to a gas station and the price you pay is due to the Luddites who hate the middle class and a prosperous State.

Ringside: California’s Refinery Capacity Stretched to the Limit

There is a 16 percent buffer between how much oil we use every day, and how much oil we are capable of refining

By Edward Ring, California Globe,  4/10/25   https://californiaglobe.com/fr/ringside-californias-refinery-capacity-stretched-to-the-limit/

According to the California Energy Commission, in 2024 daily oil consumption in California averaged not quite 1.4 million barrels per day. Meanwhile, daily refinery capacity in California is just over 1.6 million barrels per day. There is a 16 percent buffer between how much oil we use every day, and how much oil we are capable of refining. That is changing fast.

If California’s refinery capacity is reduced and there’s a glitch, options are limited. There are no pipelines linking the state to other crude oil production and refining regions. If refined gasoline had to be imported, it would be impractical due to the need to transport it by ship to coastal terminals or send by rail in tank cars. And there are a limited number of out-of-state refineries equipped to produce the unique formulation required for gasoline sold in California.

It’s not easy to extract oil, refine oil, or distribute oil in California’s state regulatory environment, despite the fact that we still rely on petroleum for almost half of our total energy supply. For example, the state legislature passed “ABX2-1” on October 14, 2024, which in an effort to prevent “price gouging,” requires California’s oil refineries to maintain a “minimum inventory of fuel to avoid fuel shortages.” Two days later, Phillips 66 announced they would close their refinery in Long Beach by the end of 2025. Officially, the timing of the announcement was coincidental.

Four months later, on February 1, 2025, up in Martinez in the San Francisco Bay Area, an accidental fire damaged a refinery operated by PBF Energy, putting it out of production completely. The company estimates partial restoration of production by June, and back to full production by the end of the year.

It doesn’t take much to cause a perfect storm. Old timers remember the gas lines back in the 1970s. Those shortages were caused by external factors; an OPEC oil embargo that limited the supply of crude oil imports. But California extracted 61 percent of its crude oil in-state back in the late 1970s, with another third coming from Alaska. Today, California imports 61 percent of its crude from foreign sources, with only another 16 percent coming from Alaska.

Because our in-state crude oil extraction is now down to 23 percent of consumption, we are extremely vulnerable to geopolitical shocks. But internal factors now present an even greater risk to California’s energy security.

The Martinez refinery operated by PBF Energy has a capacity of 139,000 barrels per day. With it temporarily down, the margin of refinery capacity over consumption shrinks from 16.3 percent down to 5.1 percent. That’s a thin margin. Imagine if this fire happened in 2026 instead of two months ago.

Starting in 2026, with the Phillips 66 refinery shut down, California’s total refinery capacity will drop to 1,483,000 barrels per day, against consumption (based on 2024 numbers) of 1,395,000 barrels per day. That will lower the surplus of refinery capacity over demand to 6.3 percent. So what happens if there’s a fire such as the one that shut down the refinery in Martinez?

In that case, total refinery capacity would drop to 1,326,000 barrels per day, creating a 68,000 barrel per day shortfall, which is a 4.9 percent deficit. If the shutdown lasts 100 days, which is the currently predicted downtime in Martinez, that would be 6.8 million barrels of oil that will not be available to meet consumer demand. If the restoration to full production takes another 150 days, which is also consistent with reports from Martinez, that would mean for another five months California’s refinery capacity only exceeds demand by 1.9 percent.

Corporate strategy is influenced by political choices. Back in October, instead of recognizing the almost perfect correlation between the fluctuating spot price for crude oil and the retail price of gasoline in California, our governor and state legislature decided to impose costly new regulations on refiners. This political grandstanding is divorced from market reality, and the market is implacable.

When the unintended effect of escalating regulations and incessant litigation is scarcity, the capacity to absorb shocks is taken away. This is what has happened in California with gasoline, electricity, and water. Our politicians have left Californians with a resource infrastructure that is one fire or cyber attack removed from economic and social chaos.

Will gas lines be as peaceful in 2026 as they were in 1979? Maybe not. Because the culprits won’t be oceans removed. They’ll be down the road, in every culpable district office in the state.