With an upcoming Valero Refinery closure in California, the 5th largest economy in the world will be more dependent of China for its demands for transportation fuels and oil derivatives to make products.
Ronald Stein, P.Ev. is an engineer, columnist on energy literacy at America Out Loud NEWS, and advisor on energy literacy for the Heartland Institute and CFACT, and co-author of the Pulitzer Prize-nominated book “Clean Energy Exploitations.”
Mike Umbro is an environmental leader, with a Master of Energy Business from the University of Tulsa and a Master of Environmental Management- Nicholas School of the Environment, Duke University and proud Californian. He founded Californians for Energy & Science to study the environmental and economic benefits of locally produced energy.
Co-authored by Ronald Stein, P.E. and Mike Umbro
Published April 28, 2025, in America Out Loud NEWS
Over the last several decades, California’s passion to transition away from fossil fuels has overregulated and overly burdened just the SUPPLY of oil production and refining but has not reduced the increasing materialistic DEMANDS of the world for the more than 6,000 products and transportation fuels made from those fossil fuels. Thus, China is savoring the future with their many refineries coming online to meet the DEMANDS of society.
The recent announcement that the Valero Benica Refinery in Northern California will be closing by the end of 2026 was disappointing, but shockingly, a prelude to more closures in the future. The Valero refinery at Benicia represents almost 9% of the state’s crude oil processing capacity to meet the materialistic demands of the States’ residents.
Just last year, in October 2024, Phillips 66 announced that it would close its Wilmington-area refining complex this year, which will further reduce the state’s gasoline, diesel, and aviation fuels production capacity, wiping out more than 8% of the state’s crude oil processing capacity. Losing another 1.3 billion gallons in annual gasoline output will only worsen the state’s supply challenges to meet the demands.
Governor Newsom’s policies, just on the “supply” side of the equation, continue to force California, the 5th largest economy in the world, to be the only state in contiguous America that imports most of its crude oil demands from foreign countries. California crude oil production is in terminal decline, driven by the lack of drilling permits, despite ample reserves. That dependence on foreign imports has increased imported crude oil from foreign countries from 5 percent in 1992 to more than 60 percent today of total consumption.
The West Coast gasoline, diesel, and aviation fuels market is isolated from other supply/demand centers as California is an energy island isolated from all States East of the Sierra Mountains. The Sierra Mountains are a natural barrier that prevents the state from pipeline access to any of that excess oil from fracking East of the Sierra Mountains. As such, the West Coast is susceptible to unexpected outages of West Coast refineries as it is unable to backfill an unexpected loss in supply of crude oil.
Because California is an isolated energy island market with no incoming oil pipeline connections over the Sierra Mountains from other states, in-state refinery closures will increase importation to meet demands for transportation fuels – sourced primarily from foreign countries like China, Saudi Arabia, Ecuador, Iraq, Columbia, and Russia.
California transportation fuel demands have staggering numbers from the in-state refineries:
- With all its 145 airports, inclusive of 9 international airports and 41 military airports, that demand 13 million gallons of aviation fuel daily. In 2019, California consumed 16.7% of the national total of jet fuel, making it the largest consumer of jet fuel in America.
- For its 30 million vehicles, California is the second-largest consumer of motor gasoline among the 50 states consuming 42 million gallons a day of gasoline, just behind Texas.
- Diesel fuel is the second largest transportation fuel used in California, consuming 10 million gallons a day of diesel to support the state’s 35 million registered vehicles.
- California refineries supply 45% of Arizona’s and 88% of Nevada’s transportation fuels, so any disruption in California impacts all three states.
- California’s northern and southern fuel supply systems are not connected, requiring ocean-going vessels to transport fuel between them.
The efforts of California toward the oil production and refining “supply” have had minimal impact on the growing materialistic “demands” of what is made from those fossil fuels.
- The mandating for a transition to EV’s has had minimal impact on gasoline consumption as most EV’s are second vehicles for low milage usage. The workhorse vehicles for major milage demands are still reliable and affordable internal combustion engines.
- Hospitals and airports continue expanding to meet the demands of society. Both hospitals and airports did not exist 200 years ago as they only exist today because of the more than 6,000 products and transportation fuels made from fossil fuels.
Today, Asia is the region with the greatest number of future petroleum refineries. As of 2021, there were 88 new refinery facilities in planning or under construction in Asia for manufactured gasoline, diesel, and aviation fuels used by every transportation infrastructure, and the military, as well as the manufactured oil derivatives that are the basis of most every product being used by mankind.
In the more immediate term, China has plans for multiple new refineries, with at least five projects expected to be completed by 2028, and another three new refineries by 2030, contributing to a broader shift towards integrated petrochemical facilities.
- These eight new refineries include the Yulong Petrochemical complex and the Huajin Aramco Petrochemical Company, as well as expansions to existing refineries like the Sinopec Gulei refinery.
The upcoming closure of Phillips 66 Refinery in 2025, and the Valero Refinery in 2026 will not reduce the materialistic demands of society for the products and fuels from those refineries. The state will obviously be importing less crude oil to refine, but instead, will be importing transportation fuels manufactured in China, the same transportation fuels that are no longer manufactured at those two closed California facilities. Yes, the big winner to meet the continuously increasing demands for the products and fuels from refined oil, appears to be China.
On another front, the current “tariff wars with China” received repercussions from China. China controls most of the rare earth’s metals around the world, thus it is a national security risk to America! They are now playing those cards, which will start to impact the supply chain of those materials to meet the demands of USA manufacturers.
- China has halted critical exports as the trade war intensifies. China has suspended exports of a wide range of critical minerals and magnets, threatening to choke off supplies of components central to the demands of automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
- Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system. Once in place, the new system could permanently prevent supplies from reaching certain companies, including American military contractors.
With closure of the Phillips 66 Refinery in 2025, and the Valero Refinery in 2026, a similar national security concern would result from our growing dependence on China to meet the humongous demands for transportation fuels by California, Arizona and Nevada.
Compounding the growing need for more importation to meet the materialistic demands of society will be the West Coast port’s ability to receive transportation fuels as marine facilities in California face increased congestion and dramatic vessel limits.
It’s obvious that the Net-Zero emission policies within California, and their lack of comprehension of “supply AND demand”, and the subsequent over regulations, mandates, and taxes just on the SUPPLY side of the equation, are causing a national security situation for the entire country’s DEMANDs for the products and fuels made from the fossil fuel industry. In the meantime, China is silently supporting the efforts of California and savoring the future with their many refineries coming online to meet the materialistic DEMANDS of society.
Please share this information with teachers, students, and friends to encourage Energy Literacy conversations at the family dinner table.
Click this Link to Sign up for Energy Literacy from Ronald Stein
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
California is a gasoline island as the Government requires that we use a special blend that promotes a reduction in air pollution. Unless China can formulate that special blend, we won’t be importing any gasoline from the PRC.
The Trump tariffs are going to make fuel from China REALLY expense.
Go for it, California 😉
California will actually be pleased with such cost increases. They’ve raising petroleum fuel taxes in order to discourage ICE vehicles.
Here in Nevada we are playing blind and deaf, doing nothing to get a pipeline from Wyoming. Admittedly, we have a small population (a little less than Orange County), so it would be expensive to install such a pipeline. I keep hoping our state government will try to make a deal with Arizona and Wyoming to protect us against California’s stupidity, but I think that’s a no go. We really need to be divorced from the stupidity that oozes out of the west coast of California.
Except they won’t be able to afford any wind or solar either…
… because both of those will also be subject to import tariffs 🙂
Along with no more federal subsidies.
Minor quibble: they are the Sierra Nevada mountains.
ETA there are other quibbles. China has most refined rare earth metals, not the raw minerals, and it is US environmental restrictions which make refining within the US so expensive.
Quibble while we are at it: Colombia
Yes. Largest rare earth mine is in US. On care and maintenance I believe
Amazingly, when you import fuel and other products from elsewhere, the “carbon footprint” disappears. Poof!. Like magic. Ironically though, it gets even bigger due to the carbon dinoprint of transporting those products.When California goes bankrupt, the rest of us will have to pick up the tab. Yeah, that’s fair.
When you have a society where few people study and even fewer understand the hard sciences, “carbon” becomes deadly poison rather than an element needed for all life, “industry” becomes a Big, Fat, Hairy Vision of Evil rather than activity necessary for civilization, and “bankruptcy” becomes something that can always be blamed on someone else — “oligarchs” or “capitalism” or something.
Magical thinking, however, survives all challenges. All you need is a uniformed populace. People have to believe in something. When they don’t respect facts, they believe in magic.
Don’t forget having the ability to refuel those vessels bringing fuel from Asia. No refineries; no marine fuel oil.
Very nice Ronald and Mike. California is so stupid it takes my breath away. Their stupidity is becoming a national problem therefore it is time to lend a hand. Give California thirty days to present a proper energy plan. If one isn’t produced on time the federal government will assume all regulatory responsibility for energy and transportation. All refineries will be fired up and produce fuel the same make up as the rest of the country. All oil and gas wells will begin pumping again and new wells will be drilled including fracking. If the California government doesn’t co operate fuel used by the government will be rationed, only law enforcement and emergency departments will be allotted the fuel they need. If government officials are found to be cheating they will be arrested and thrown in jail. We have put up with their BS long enough, time to move on with or without them.
By what authority? (Not that I disagree with the ideas.)
This is not a new development. Both Jerry Brown and Gavin Newsom have had numerous meetings with the Chinese to encourage more trade between California and Communist China.
And of course, both Jerry Brown and Gavin Newsom have family business connections between Indonesian and Ecuadorian oil importers.
No fuel from TX?
Will have knock-on effect on prices in the midcoast, such as Portland OR which gets fuel from refineries in NW WA state that are in substantial part supplied by a spur off TransMountain’s big pipes from Alberta.
(TMP is again shipping crude oil by tanker, using its greatly expanded capacity, present markets are in Asia. Much of the extra is heavy crude, so receiving refineries are those that have been modified.)
As for CC, it is not receiving Russian oil any more, at least officially, to appease US.
Thats just semantics. Russian oil is rebranded by a tanker stopover in another country
This is a good story but some of the facts about interstate refined products pipelines isnt correct.
US EIA atlas of refined products pipelines shows connections from LA to Salt lake City and midwest and also through Arizona to NM and Texas.
So no its not an island
The east-west pipeline in southern California runs TO Arizona, supplying about 1/2 of
Arizona’s gasoline needs [as the article stated]. So here in AZ we are partially dependent on California’s refineries, and consequently have higher prices than average.
The other 1/2 of gas demand comes to Arizona from Texas refineries. Arizona has no refineries. and New Mexico only one. See Table 3 at the eia.gov link below:
https://search.usa.gov/search?utf8=%E2%9C%93&affiliate=eia.doe.gov&query=New+Mexico+refineries&search=
The refinery may close sooner than expected: apparently it is on fire
https://www.ktvu.com/news/valero-refinery-fire-benicia