Two major US refinery closures are expected to push inventories of gasoline, diesel, and jet fuel to their lowest combined levels since 2000, according to the US Energy Information Administration. Phillips 66 closed its Wilmington, California facility, which had processed approximately 139,000 barrels of crude per day, while Valero Energy idled its Benicia refinery in the San Francisco Bay Area by April 2026, contracting California's refining network by a significant margin.

The EIA projects finished transportation fuel inventories will end 2026 at approximately 375 million barrels, the lowest year-end total since 2000, when they closed at 358 million barrels. Jet fuel faces the most acute pressure, with days of supply projected to fall to approximately 21 days, the lowest since 1963. Distillate inventories including diesel receive partial mitigation from growing biofuel blending, with renewable diesel and biodiesel now comprising roughly 9% of US distillate consumption, up from 5% in 2021.

California's limited pipeline connectivity to other US refining hubs means the state faces higher dependence on imports for specialized fuel blends, adding cost and logistics risk to the regional supply chain. Industry observers note that reduced total capacity across the US system means any unplanned outage or scheduled maintenance at an operating refinery carries a higher probability of affecting regional retail prices than in prior years when slack capacity was more available. Lower inventories typically correlate with wider wholesale refining margins as buyers compete for a smaller pool of available product.

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