Democratic California Gov. Gavin Newsom is asking a state regulator to try to keep oil refineries in business in the state after Democrats spent years targeting the industry with aggressive regulation.
Newsom wrote to California Energy Commission (CEC) Vice Chair Siva Gunda on Monday to urge that Gunda and the CEC “redouble” their efforts to keep fuel refiners in the state on the heels of Valero’s announcement that it will be taking at least one of its California refineries offline by April 2026. In the letter, Newsom attempts to characterize the state’s dwindling refining presence as part of a wider national trend, but analysts have warned for years that California’s hostile regulatory environment is what is truly driving the fossil fuel industry’s retreat from the state.
“I write to direct you to redouble the State’s efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades,” the letter states. “Further, I am directing you, as my Administration’s lead representative on this issue, to reinforce the State’s openness to a collaborative relationship and our firm belief that Californians can be protected from price spikes and refiners can profitably operate in California — a market where demand for gasoline will still exist for years to come.”
Valero announced on April 16 that it intends “to idle, restructure, or cease refining operations at Valero’s Benicia Refinery by the end of April 2026.”
Patrick De Haan, a gasoline analyst, noted in an April 16 post to X that Valero’s announcement will leave only seven refineries in California by April 2026. For comparison, the state had 20 refineries as of 2000, according to the U.S. Energy Information Administration.
California’s “cap-and-trade” program, as well as its tax environment and push to ban the sale of new gas-powered cars in the state by 2035, are frequently cited as examples of hostile regulation driving refineries out of the state. Meanwhile, Newsom and other California Democrats like Attorney General Rob Bonta have ripped the fossil fuel industry for years, often characterizing it as a malignant force in society or a collusive industry committed to misleading consumers.
A spokesman for Newsom said that “the Governor’s letter speaks for itself.”
California has the highest average per-gallon price of gas at the pump of any state in the country, according to AAA gas price data. Meanwhile, California regulators have proposed to more deeply involve the state in the management of refineries, including the prospect of state-owned refineries.
Andy Walz, president of Chevron Americas products, described California as a “tough place to do business” in August 2024 after his company decided to move its headquarters out of the state earlier that year. Walz specifically identified California’s “cap-and-trade” rules and the gas-powered car ban as specific headwinds that helped lead Chevron to its decision to move its center of gravity elsewhere.
“For well over two decades now, politicians like Governor Newsom have hammered California’s conventional energy producers, both large and small, with excessive taxes, regulations, and threats of profit taking,” Tom Pyle, president of the American Energy Alliance, previously told the DCNF. “Many companies have already moved out of the state, along with hundreds of thousands of residents as a result of these and other harmful policies … like a cap on profit margins, that hurt consumers by making conventional energy investments uneconomic. These types of policies have outsourced jobs to other states and increased California’s reliance on oil and electricity imports — all with little or no environmental benefit.”
In the letter, Newsom pointed to the recent closure of the LyondellBasell refinery in Houston and the Trump administration’s trade policies to support his argument that refinery closures are part of a broader national trend. When LyondellBasell announced that the refinery would close in January, the company said that it is getting out of the refining business altogether and focusing instead on low-carbon energy.
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