Phillips 66’s LA Refinery Closure: Fuel Supply and Economic Impact
Explore how Phillips 66’s phased closure of its Los Angeles refinery in 2025 reshapes California’s gasoline supply, local jobs, and environmental cleanup amid the state’s energy transition.
Key Takeaways
- Phillips 66 will close its LA refinery in Q4 2025 after phased shutdowns.
- The refinery supplies about 8% of California’s gasoline, impacting fuel availability.
- Around 600 workers face layoffs, with limited transfers to marine terminal roles.
- Environmental cleanup is complex due to long-term contamination at the site.
- Closure reflects broader shifts in California’s energy policies and market dynamics.
After more than a century of refining oil near the Port of Los Angeles, Phillips 66 is winding down operations at its Los Angeles refinery, with a complete closure set for late 2025. This move is no sudden decision but a response to shifting market forces, tighter state regulations, and California’s push toward cleaner energy. The refinery currently supplies about 8% of the state’s gasoline and employs roughly 600 workers, making its closure a significant event for fuel supply and local communities alike.
California’s energy landscape is evolving fast. The state’s Low Carbon Fuel Standard and growing demand for electric vehicles have chipped away at petroleum product demand, squeezing refining profits. Phillips 66’s phased shutdown will ripple through fuel markets, employment, and environmental management, raising questions about how California will balance energy needs with sustainability goals.
This article unpacks the key facts behind the closure, explores its impact on fuel supply and workers, and examines the challenges of cleaning up a century-old industrial site. If you’re tracking California’s energy future or curious about how refinery closures reshape local economies, read on for a clear-eyed view of what’s ahead.
Understanding the Closure
Phillips 66’s decision to close its Los Angeles refinery didn’t happen overnight. It’s the result of a perfect storm: shrinking demand for petroleum products, tougher state regulations, and razor-thin refining profits. California’s Low Carbon Fuel Standard pushes cleaner fuels, while electric vehicles nibble away at gasoline needs. Refining margins on the West Coast have fallen sharply, with the crack spread for gasoline halving to just 50 cents per gallon in May 2024 compared to the previous year.
The refinery, capable of processing 139,000 barrels per day, supplies about 8% of California’s gasoline. That’s a sizable chunk, especially when paired with Valero’s Benicia plant, which also plans to shut down. Together, these closures will reshape the state’s fuel landscape. Phillips 66 plans a phased shutdown, a careful, multi-step process to safely halt operations while coordinating with local agencies and environmental regulators.
This isn’t just a business move; it’s a sign of California’s energy transition. The company has already converted its Rodeo refinery to renewable diesel production, signaling a shift away from traditional crude oil refining. The LA refinery’s closure reflects broader economic and regulatory pressures that are rewriting the rules for energy companies on the West Coast.
Impact on Fuel Supply
Losing 8% of California’s gasoline refining capacity isn’t a small deal. The state’s unique geography and limited pipeline connections mean it can’t easily tap into national fuel supplies. With Phillips 66’s LA refinery and Valero’s Benicia plant both closing, California will lean more on imports and remaining refineries to fill the gap.
This shift is expected to tighten fuel markets. The U.S. Energy Information Administration and industry experts foresee upward pressure on gasoline prices, a familiar story for Californians who already pay some of the nation’s highest pump prices. The closures add a layer of supply risk, making the market more vulnerable to disruptions or price spikes.
Consumers might feel the pinch at the pump, but the bigger picture involves balancing cleaner energy goals with reliable fuel availability. California’s regulators have introduced laws to increase transparency and prevent sudden price shocks, but the market will have to adjust to a leaner refining footprint. It’s a complex dance between supply, demand, and policy.
Community and Workforce Effects
The human side of this closure is profound. Phillips 66 employs about 600 workers at the LA refinery, with more than half represented by the United Steelworkers Union. Most of these employees and contractors face layoffs by December 2025, though a small number may transfer to the company’s marine oil terminal nearby.
Job losses ripple beyond the refinery gates. Local businesses that rely on refinery operations will feel the impact, and the economic activity tied to this industrial hub will contract. Phillips 66 has pledged to support employees and contractors through the transition, but details on post-closure employment remain scarce.
For workers, this is more than a paycheck—it’s a community and identity. The closure underscores the challenges faced by industries caught between economic realities and environmental imperatives. It’s a reminder that energy transitions carry real human costs alongside environmental benefits.
Environmental Cleanup Challenges
Decades of refining have left a heavy environmental footprint. The LA refinery site harbors significant soil and groundwater contamination, including what experts call a “lake” of hydrocarbons beneath the facility. This legacy pollution presents a daunting cleanup task.
Phillips 66 is beginning the process of environmental remediation, a multi-year effort involving soil and water cleanup, regulatory oversight, and community engagement. The company has not disclosed detailed timelines or cost estimates, leaving some public concern about transparency and responsibility.
Environmental remediation is more than a technical fix—it’s a test of how legacy industrial sites can be safely transformed. The refinery’s strategic location near the Port of Los Angeles adds complexity, as future redevelopment depends on successful cleanup and regulatory approval. This chapter will shape how California handles the environmental debts of its industrial past.
Navigating California’s Energy Transition
Phillips 66’s LA refinery closure is a microcosm of California’s broader energy shift. The state’s aggressive policies to reduce carbon emissions and promote renewables are reshaping the refining landscape. Traditional oil refining faces mounting challenges from regulatory pressures, declining demand, and competition from cleaner fuels.
California lawmakers and regulators are tasked with balancing multiple priorities: ensuring fuel affordability, securing reliable supply, and protecting jobs while advancing environmental goals. The refinery closures highlight the tension between these aims. Phillips 66’s move to renewable diesel production at its Rodeo facility signals one path forward.
For investors, policymakers, and communities, this transition demands adaptability and foresight. The energy future in California is unfolding, with refinery closures like Phillips 66’s LA plant marking both an end and a beginning in the state’s evolving energy story.
Long Story Short
Phillips 66’s phased closure of its Los Angeles refinery marks a pivotal moment in California’s energy journey. The loss of about 8% of the state’s gasoline refining capacity will shift reliance toward imports and remaining plants, likely nudging fuel prices upward in a market already known for volatility. For the 600 workers and contractors, the transition brings uncertainty, despite company commitments to support during the wind-down. Environmental remediation looms large as a challenge. Decades of refining have left behind significant contamination, including a notorious underground hydrocarbon “lake.” How this cleanup unfolds will set important precedents for handling legacy pollution from industrial giants. Meanwhile, the site’s strategic location near the Port of Los Angeles offers potential for redevelopment, but only after careful environmental and regulatory steps. This closure isn’t just about one refinery—it’s a snapshot of California’s broader shift away from fossil fuels toward renewable energy. Policymakers, industry players, and communities face the delicate task of balancing cleaner energy ambitions with fuel affordability and job security. As the refinery’s smokestacks dim, the state’s energy story enters a new, complex chapter.