Phillips 66 has announced plans to close its refinery near Los Angeles by the end of next year. This decision comes as the company responds to market concerns, as noted by the Associated Press, and is echoed by the company’s CEO, who referred to “market dynamics.”
The announcement follows the recent signing of a new law by California Governor Gavin Newsom. This law empowers state energy regulators to require refiners to maintain certain fuel inventory levels and approve scheduled maintenance at refineries.
In August, Newsom expressed his frustration, stating, “Price spikes at the pump are profit spikes for Big Oil.” He emphasized the need for refiners to plan ahead and maintain fuel supplies to stabilize prices. By holding reserves, he believes Californians could save money on gas each year.
The new law is a response to findings from the California Energy Commission. Last year, it was reported that for 63 days, refiners in the state only maintained a gasoline inventory equivalent to 15 days of consumption. The governor’s office suggests this limited supply contributed to higher prices at the pump.
The Phillips 66 refinery in the L.A. area produces 85,000 barrels of gasoline and 65,000 barrels of diesel fuel each day. The shutdown will reduce the fuel supply for California drivers, who already face the highest gas prices in the country.
Governor Newsom and his administration have placed some of the blame for high prices on oil companies like Phillips 66, accusing them of limiting supply to increase profits. However, the oil industry points out that California has the highest additional costs due to excise taxes and carbon taxes.
The closure of the Phillips 66 refinery will lead to the loss of 600 jobs for company employees and 300 jobs for contractors.
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