California faces rising energy prices and refinery closures with no clear plan to ensure affordability for residents.

California residents are increasingly feeling the strain of rising energy costs, particularly when it comes to fueling their vehicles. Current trends indicate that gasoline and diesel prices in the state are not only significantly higher than the national average but are on track to reach prices nearly double that of the lowest state rates—potentially increasing by 50 to 60 percent above the overall U.S. average.

Chevron has recently spotlighted one of the primary factors contributing to California’s soaring fuel prices: taxes and fees. In early 2026, the company initiated a campaign at selected gas stations throughout the state, underscoring that California imposes the highest gasoline taxes and regulatory costs in the nation.

A comprehensive analysis from the University of Southern California’s Marshall School of Business highlights a troubling trend: over the last five decades, California’s gasoline prices have surged by approximately 250%, while the state’s refining capacity has sharply declined. In parallel, in-state oil production has plummeted by more than 60%, the number of operational refineries has been reduced by over half, and gasoline inventories have dropped significantly, with energy imports increasing sevenfold.

These changes are largely attributed to a regulatory framework that has rendered refining in California both prohibitively expensive and less competitive overall. This downward trend appears set to continue, exacerbated by the impending shutdown or significant reduction in operations at two of the state’s largest refineries, Valero and Phillips 66, which are anticipated to cut about 20% of California’s in-state refining capacity by the close of 2026.

Valero executives have openly cited California’s challenging regulatory environment and high operating costs as reasons for their decision to withdraw from the state, labeling the facility as increasingly “marginal” and unsustainable. Refinery operating costs in California are reportedly 30% higher than the national average, according to experts who have evaluated the region’s regulatory burdens and compliance expenses.

The ramifications of refinery closures could be severe, with projections indicating that gasoline prices may rise by as much as 75% by the end of 2026. This scenario could see regular fuel prices soaring to over per gallon, particularly if local supply wanes and is primarily replaced by imports from out-of-state and foreign sources. Such increases pose a threat to California’s economy, affecting not just commuters but also key sectors such as agriculture, trucking, construction, and emergency services. As prices rise, consumers already grappling with elevated grocery bills and housing costs face additional financial pressure.

The American Legislative Exchange Council’s Energy Affordability Report ranks California as 49th in the nation concerning costly energy expenses, drawing attention to the state’s electricity rates as among the highest nationwide. The report attributes this to a policy framework laden with mandates like cap-and-trade and clean energy regulations that amplify costs passed down to consumers.

In light of these pressing challenges, California’s policymakers are urged to reevaluate their approach to energy regulation. There is a pressing need to promote policies that support the revitalization of the state’s refining capacity and secure affordable energy for both homes and businesses. One promising avenue may be the implementation of the Affordable, Reliable, and Clean Energy Security Act, which advocates for robust domestic energy production, infrastructure resilience, and stable pricing.

Such forward-thinking reforms could reposition California’s energy landscape, fostering an environment where energy is both accessible and manageable for its residents and industries.