The Hidden Cost Californians Pay for Flawed Energy Policies

By Steve Williams

When University of Southern California expert Michael Mische projected that gas prices could climb to $8 per gallon, Governor Gavin Newsom didn’t just disagree — he lashed out on social media. He mocked the report as “unsourced,” accused Mische of being “bankrolled by Saudi Arabia,” and dismissed the findings as using the “scientific method of guessing.”

But at Tuesday's California Assembly Utilities and Energy Committee hearing, reality came into focus. Siva Gunda, California Energy Commission Vice Chair, confirmed what many already knew: Oil refinery closures are an immediate threat that could send fuel prices soaring. The planned shutdowns of the Phillips 66 refinery in Los Angeles and the Valero facility in Benicia — scheduled for late 2025 and 2026 — are expected to cut nearly 20 percent of California’s in-state gasoline production. This gap will need to be filled by increasing imports from other countries, adding more volatility to an already fragile market.

These closures didn’t come out of nowhere. They were the predictable outcome of mounting pressure from environmental regulations, aggressive public policies, and costly compliance mandates. Valero, for example, was recently fined $82 million for air violations. Meanwhile, California hasn’t built a major new refinery since 1969.

While these policies may be well-intentioned, the lack of a practical transition strategy has left California consumers — especially working families, small businesses, and commuters — vulnerable to shrinking supply and unsustainable, soaring prices.

And the consequences don’t stop at the pump. Beyond supply risks, California refineries directly employ close to 8,700 workers — more than half in Los Angeles County. Critical roles like petroleum pump system operators, refinery operators, and gaugers earn an average of $97,000 annually, often with just a high school diploma. These facilities also rely on thousands of union contractors during maintenance from the California Building Trades. Losing these jobs would severely impact local economies and middle-class families.

That makes the four remaining refineries in Los Angeles County — Chevron El Segundo, PBF Energy Torrance, Marathon Los Angeles, and Valero Wilmington — vital lifelines. They power delivery trucks, airport shuttles, and the daily lives of thousands of workers. Together, these refineries represent more than 50% of California’s total refining capacity. Yet, they too face pressure — and if they close, the economic fallout will be devastating.

What often gets overlooked is that California enforces the strictest environmental standards for petroleum refining in the nation. These rules have made our refineries among the cleanest globally, employing cutting-edge technology to reduce emissions and improve efficiency. But are we pushing the limits of what’s sustainable? Can we afford to lose more refining capacity under the toughest rules in the industry?

Some argue the solution is simple: Switch to 100 percent renewable fuels. California is already converting refineries like Marathon and Phillips 66 in the Bay Area to process renewable diesel from cooking oil and animal fat. And in Paramount, CA, World Energy now runs the world’s first facility dedicated to renewable jet fuel. However, renewable infrastructure is still emerging and far from meeting the scale or pace of traditional gasoline demand.

Adding to supply pressures are high state-imposed costs: roughly $0.90 per gallon in direct taxes plus another $0.54 per gallon funding programs like the Low Carbon Fuel Standard. Together with limited refinery output, these policies contribute to a volatile, expensive gas market.

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Now, California Democrats are sounding the alarm — they no longer trust the state regulators under Newsom’s administration. Assemblyman David Alvarez, D-San Diego, commented, “We have a crisis on our hand that may have been self-created by the actions perhaps taken by the state, by regulators.” Assemblymember Cottie Petrie-Norris, D-Irvine added, “If California companies were raking it in, why did we have two refineries announce their intent to close?”

Even the California Air Resources Board (CARB) now admits a significant blind spot. Chair Liane Randolph conceded during the hearing that CARB does not currently assess how its clean air policies impact consumer costs. This means working Californians pay a hidden price — one policymakers haven’t properly quantified or addressed.

There’s no doubt that California should lead on clean energy — but true leadership means confronting reality and avoiding self-inflicted crises. If we don’t act now to stabilize our energy infrastructure, it won’t be oil executives or politicians who continue to suffer — it will be everyday Californians.

Stabilizing our energy future means maintaining — and potentially increasing — baseline refinery capacity, streamlining permits for upgrades, and facilitating the acceleration of transitional technologies. This balanced approach builds a reliable bridge from fossil fuels to clean energy, rather than burning that bridge before the other side is ready.

Cleaner air and affordable gas aren’t mutually exclusive. But without smart planning and honest leadership, Californians get neither.

Steve Williams is a seasoned technology, real estate, and land use professional and Executive Board member of the Republican Party of Los Angeles County. Follow him on X (formerly Twitter): https://x.com/SteveAWilliamsX

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