The Impending Collapse of California’s Transportation Fuel Infrastructure

The Impending Collapse of California’s Transportation Fuel Infrastructure

Ronald Stein

With the loss of transportation fuel supplies from Asian refineries resulting from the Iranian War and California’s huge dependency, the 4th largest economy in the world is on the precipice of an unprecedented, self-inflicted logistical and national security catastrophe. Driven by adversarial state policies and aggressive litigation from activist groups, the state’s domestic refining capacity has already been crippled, and has led to the most expensive transportation fuels in the nation for its California residents.

California is the 4th largest economy in the world and an “ENERGY ISLAND that is separated from the other 49 States by the Sierra Mountains. There are no pipelines over those prestigious mountains.

California demands 58 million gallons of transportation fuel DAILY:

• 11 million gallons/day for Jet fuel for the States’ military and international airports.
• 10 million gallons/day for Diesel for the States’ trucking and construction industries.
• 37 million gallons/day for Gasoline for the States’ more than 36 million vehicles.

If those transportation fuels are not made in California, they have to be made in refineries located in the Gulf or East Coast, or in foreign countries with gross polluting refineries and shipped across the Pacific Ocean via polluting tankers. However, the Ports of Los Angeles, Long Beach, and Oakland are NOT designed to import those humongous volumes of transportation fuels.

Without immediate federal intervention via the Defense Production Act, California, its neighboring states, and the U.S. military face the potential for a total supply chain collapse.

1. Policy-Driven Destruction: The Timeline of a Dying Industry

A series of aggressive, adversarial state legislative and regulatory actions have systematically dismantled California’s refining sector, stripping away 35% of the state’s crude oil refining capacity and slashing gasoline and jet fuel production by 40% and 30% respectively:

• Assembly Bill X2-1 (ABX2-1): Signed in October 2024, this law mandated minimum fuel storage levels, driving up operating costs to unsustainable levels.
• The Phillips 66 Wilmington refinery closure (October 17, 2025): Forced by the state’s regulatory climate, Phillips 66 shut down its Wilmington refinery, taking 139,000 barrels per day offline.
• The Valero Benicia refinery Exit (January 31, 2026): Burdened by a record $82 million fine and the new tank storage mandate, Valero took a staggering $1.1 billion loss to permanently shutter its Benicia refinery (135,000 barrels per day).
• The Marathon Martinez refinery & Phillips 66 Rodeo refinery Conversions (2023): Marathon and Phillips 66 converted facilities to renewable diesel, taking another 260,000 barrels per day of crude processing capacity offline.

California is already operating on borrowed time, kept afloat only by emergency inflows of transportation fuels from the rest of the nation:

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