Phillips 66 announces closure of Los Angeles area oil refinery after Newsom law

Oil company Phillips 66 announced Wednesday that it will close its Los Angeles-area refinery by the end of 2025, pointing to concerns about the future market.

The announcement came days after California Governor Gavin Newsom signed a new law on Monday that will establish new regulations for the oil industry in the Golden State.

“With the long-term sustainability of our Los Angeles Refinery uncertain and affected by market dynamics, we are working with leading land development companies to evaluate the future use of our unique and strategically located properties near the Port of Los Angeles,” Mark Lashier, president and CEO of Phillips 66, said in a statement. “Phillips 66 remains committed to serving California and will continue to take necessary steps to meet business and customer demands.”

Lashier did not mention the new law signed by Newsom.

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Gov. Gavin Newsom speaks at a news conference where he signed legislation on oversight of oil and gas wells on Wednesday, Sept. 25, 2024, in Los Angeles. (Jason Armond/Los Angeles Times via Getty Images/Getty Images)

The company’s Los Angeles-area refinery accounts for about 8% of the state’s refining capacity, according to the California Energy Commission.

Phillips 66 has hired two real estate development firms, Catellus Development Corporation and Deca Companies, to evaluate the future use of the 650-acre sites in Wilmington, Calif., and Carson, Calif., the company said in a news release.

“These sites offer an opportunity to create a transformational project that can support the environment, generate economic development, create jobs and improve the region’s critical infrastructure,” said Lashier.

The oil company estimates that approximately 600 employees and 300 contractors currently operate the refinery in the Los Angeles area.

“We understand this decision impacts our employees, contractors and the broader community,” Lashier said. “We will work to help and support them through this transition.”

The Phillips 66 Los Angeles refinery in Wilmington, California, on Thursday, March 21, 2024. (Bing Guan/Bloomberg via Getty Images/Getty Images)

At the California State Capitol on Monday, Newsom signed legislation that his office said “will help prevent spikes in gasoline prices and save consumers money at the pump.”

The law allows the state to require petroleum refineries to maintain a minimum fuel inventory and authorizes the California Energy Commission to require refineries to plan for refueling during refinery maintenance outages.

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Newsom’s office said the move will “prevent price spikes that cost Californians more than $2 billion last year by giving the state more tools to require oil refineries to stockpile supplies and plan maintenance in advance.” .

Ken Malloy Harbor Regional Park’s Phillips 66 oil refinery in Wilmington, California. (Citizen of the Planet/Education Images/Universal Images Group via Getty Images/Getty Images)

“Price spikes have cost Californians billions of dollars over the years, and we’re not waiting for the industry to do the right thing – we’re taking steps to avoid these price spikes and save consumers money at the pump,” Newsom said. in a statement. “Now the state has the tools to ensure it stocks supplies and plans for maintenance in advance so there are no shortages that drive up prices. I’m grateful to our partners in the Senate and Assembly for acting quickly to move this forward and help provide relief to Californians.”

California Assembly Speaker Robert Rivas, also a Democrat, said the measure is a “critical achievement” in reducing the cost of living and that “big oil companies are now responsible for stabilizing prices at the pump.”

Although its Los Angeles-area refinery will close, Phillips 66 said it will not completely cease operations in the state of California. The oil company promised to work with the State to “supply the fuel markets and satisfy the continuous demand of consumers”.

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Phillips 66 said it “will source gasoline from sources inside and outside its refining network, as well as renewable diesel and sustainable aviation fuels from its Rodeo Renewable Energy Complex in the San Francisco Bay Area.”