CA gas could hit $8.44 per gallon in 2026 due to refinery closures, regulations

“…The new study from University of Southern California professor Michael A. Mische examined California’s historical gas prices, oil supply and refining capacity, and modeled the likely impact of refinery closures and costly new fossil fuel and refinery fees and regulations.

“The shutdown of the two California-based refineries could possibly place the Golden State in a precarious economic situation and create a gasoline deficit potentially ranging from 6.6 million to 13.1 million gallons a day, as defined by the shortfall between consumption and production,” wrote Mische. “Reductions in fuel supplies of this magnitude will resonate throughout multiple supply chains affecting production, costs, and prices across many industries such as air travel, food delivery, agricultural production, manufacturing, electrical power generation, distribution, groceries and healthcare.”

“Based on current demand and consumption assumptions and estimates, the combined consequences of the 2025 Phillips 66 refinery closure and the April 2026 Valero refinery closure, together with the potential impact of legislative actions such as, but not limited to, the new LCFS standard, increase in excise taxes, Cap and Trade, SBX1-2, and ABX2-1, the estimated average consumer price of regular gasoline could potentially increase by as much as 75% from the April 23, 2025, price of $4.816 to $7.348 to $8.435 a gallon by calendar year end 2026,” continued Mische.

Mische said the high delta between California gas prices and that of other states is the result of state taxes and fees, and policies that have reduced in-state oil production and refining capacity faster than gasoline demand has fallen…”