Wilmington Refinery Shutdown Sparks Economic Uncertainty as California Implements New Fuel Regulations

The latest domino to fall in the fight for clean air and consistently lower fuel prices happened this week when the Wilmington refinery, Phillip 66, announced it was shutting down. 

The stoppage will affect the 600 employees and 300 contractors involved in the refinery’s operations. 

The shutdown follows Gov. Gavin Newsom’s signing of a bill on Oct. 14, which requires oil refiners to maintain a minimum fuel inventory. In addition, it authorizes the state’s Energy Commission to ensure refiners plan for resupply during maintenance outages to prevent supply shortages.

Upon the refinery’s closure announcement, Councilman Tim McOsker said he spoke with Phillips 66’s leadership and respects their decision to wind down operations. The councilman said the company assured him it was committed to assisting its employees with making the transition.  

“I have … reached out to the city’s Economic and Workforce Development Department [EWDD], and we are prepared to assist workers affected by this change,” McOsker said in a released statement. “We will be working closely with Phillips 66, their employees, and our community to make sure that we’re supporting all who are impacted.”

McOsker called the closure “significant” and that it “marks the end of one story in Wilmington’s industrial era but opens the door to exciting opportunities for new jobs, improved air quality and innovative economic benefits in the years to come.” 

“We need to seize this moment to work with business, labor and community to further LA’s bold climate goals,” McOsker said.

Phillip 66 CEO, Mark Lashier, called the “long-term sustainability of our Los Angeles refinery uncertain and affected by market dynamics.”

The CEO said the company is working with land development firms to evaluate the future use of its properties near the Port of Los Angeles

The exit will leave a big hole in California’s motor fuel supply. The Los Angeles refinery produces 85,000 barrels per day of gasoline and another 65,000 barrels per day of diesel and jet fuel, according to Phillips 66.

The company will supply gasoline from sources inside and outside its refining network as well as renewable diesel and sustainable aviation fuels from its Rodeo Renewable Energy Complex in the San Francisco Bay Area.

California, the most populous state in the United States, consistently experiences some of the nation’s highest average gas prices and seemingly random refinery shutdowns for maintenance, leading to price hikes during peak travel seasons. 

The legislation Newsom signed was inspired by the findings of the state’s Division of Petroleum Market Oversight, which showed that gas price spikes were largely caused by increases in global crude oil prices and unplanned refinery outages. 

The law gives energy regulators the authority to require that refineries keep a certain amount of fuel on hand. The goal is to try to keep prices from increasing suddenly when refineries go offline for maintenance. Proponents say it would save Californians billions of dollars at the pump.

Newsom joined lawmakers at the state Capitol to sign the law and criticized the oil industry for its efforts to keep the legislation from passing.

“They continue to lie, and they continue to manipulate,” he said. “They have been raking in unprecedented profits because they can.”

The shutdown opens up new possibilities. McOsker said he would work with the property ownership to ensure a thorough cleanup and an inclusive, beneficial redevelopment of the site. 

“It’s crucial that this property remains an important economic driver for our district, benefiting both our environment and our local workforce,” McOsker said.