California is now importing gasoline through roundabout shipping routes, including tankers routed via the Bahamas, as the state’s refining capacity shrinks under a wave of permanent plant closures. The Valero Benicia refinery, one of Northern California’s last major fuel producers, will keep making gasoline only through April 2026 before shifting entirely to imports. With Phillips 66 also shutting down its Los Angeles-area refinery, the state faces a supply gap that is already pushing costs higher and raising hard questions about whether regulators planned adequately for the transition.
Benicia Refinery Winds Down by Spring
Governor Gavin Newsom confirmed in a January 2026 statement that Valero’s Benicia facility will keep producing fuel through April 2026, after which the refinery will be fully idled. Under Valero’s updated plan, the Benicia site will then supply Northern California through a combination of existing inventories and imported gasoline and diesel. That timeline gives the region only a short remaining window of in-state production before a key source of locally refined fuel goes dark and the Bay Area becomes far more dependent on marine deliveries.
Newsom’s statement explicitly referenced the state’s refinery transparency and resupply policy framework, built on legislation known as SB X1-2, which was designed to prevent price spikes during refinery outages. But that framework was crafted around temporary maintenance shutdowns and unplanned disruptions, not the permanent retirement of a major plant. Once Benicia stops processing crude, Northern California will depend on fuel shipped in from other states or overseas, a structural shift that no inventory mandate was originally designed to manage over the long term, especially if several facilities exit the market in close succession.
Phillips 66 Closures Shrink State Capacity
The Benicia wind-down does not exist in isolation. Phillips 66 has announced it will close its Los Angeles-area refinery, a move that state energy officials have cited as removing a substantial share of California’s total refining capacity. That decision comes on the heels of the Phillips 66 Santa Maria facility, which ended operations in early 2023 and is now headed for demolition under a formal environmental review process in San Luis Obispo County. The decommissioning work underscores that these closures are not mothballings, but permanent exits from the state’s fuel production system.
Industry executives and analysts point to a combination of stringent emissions rules, carbon reduction mandates, and uncertainty about future compliance costs as key reasons for this retreat. California’s long-term policy trajectory is explicitly aimed at phasing down fossil fuels, which makes multimillion-dollar refinery upgrades harder to justify. Operators like Phillips 66 and Valero have responded by reallocating capital to other regions rather than extending the life of plants facing a shrinking operational horizon. The result is a rapid contraction in in-state refining that outpaces the build-out of replacement import infrastructure, leaving the system more exposed to global market swings.
Bahamas Shipping Route Fills the Gap
The supply consequences are already visible on the water. U.S. gasoline cargoes are now being routed through the Bahamas before heading to California, adding distance and cost to the state’s fuel supply chain. That circuitous path reflects both a tight tanker market and the geographic reality that California, isolated on the West Coast with limited pipeline connections to Gulf Coast refineries, must compete for seaborne cargoes when local production drops. Chartering vessels for these longer voyages is expensive, and those premiums ultimately show up in retail prices…