Federal energy data show that the closure of several US refineries, combined with steady fuel consumption, is expected to push inventories of gasoline, distillate, and jet fuel toward their lowest levels since the early 2000s. The US Energy Information Administration has factored two pending refinery closures into its Short Term Energy Outlook, projecting the shutdowns will reduce domestic production of refined products and contribute to a dip in finished fuel stocks through 2026.

California has become the focal point of the contraction. Phillips 66 ceased operations at its Wilmington refinery in Los Angeles, a plant that historically processed roughly 139,000 barrels of crude per day. Valero Energy followed with plans to idle its Benicia refinery in the Bay Area, shifting toward supplying the California market through existing inventories and imports instead. Analysts note the two facilities represented a meaningful share of West Coast refining capacity, leaving the region more exposed to supply fluctuations and pricing swings, particularly for specialized blends such as CARBOB gasoline that are not easily sourced from other US refining hubs.

Lower inventories tend to translate into tighter wholesale markets and wider crack spreads, the margin refiners earn between crude input and finished fuel output, as buyers compete for a smaller pool of product. Refinery utilization rates have fluctuated rather than risen uniformly following the closures, reflecting maintenance schedules and feedstock supply alongside the reduced capacity, and remaining refiners face heightened pressure to run reliably as the industry works through fewer total barrels of available capacity nationwide.

Source: BIC Magazine -- https://www.bicmagazine.com/industry/refining-petrochem/refinery-closures-and-their-impact-on-us-fuel-supply/