Last week, Phillips 66 said it would shut down its Los Angeles oil refinery by the end of next year. Now, refining peer Valero Energy Corp is suggesting it could be next.
Valero, the United States’ second-largest refiner by capacity, is keeping all options “on the table” for its two California refineries. According to the company’s Chief Executive Lane Riggs, this is due to the increasing regulatory pressure that has pervaded California.
Oil refiners in California saw lower-than-average margins in late spring/early summer this year as lower operating capacity failed to deliver higher margins. According to the EIA, this is because refiners increased their existing capacity utilization rates.
Despite the lower margins, California boasts the most expensive gasoline in the United States—a condition that the California Governor’s Office blames on refiners. In an attempt to hold refiners accountable, the Office has threatened to penalize them for price gouging.