Proposed regulations to hike California gas prices and shutter the state’s oil refineries Image By EPN Staff Key Points Proposed changes to California’s cap-and-invest program would significantly tighten emissions allowances, increasing refinery compliance costs and potentially raising gasoline prices by over $1 per gallon by 2030. Industry leaders warn the regulations could lead to refinery closures, job losses, and broader economic impacts, with ripple effects in neighboring states that rely on California’s fuel supply. Supporters argue the policy is necessary to meet long-term climate goals, while critics say it will drive up costs for consumers and businesses across multiple sectors. Residents of Los Angeles and San Francisco are paying close to $6 per gallon of gasoline. Those high prices are expected to climb with proposed revisions to California’s cap-and-invest program. The California Air Resources Board (CARB) has released a proposal that seeks to remove 118.3 million metric tons of carbon allowances from the state’s cap-and-invest program between 2027 and 2030. Compliance will cost refineries $1.5 billion a year by 2035, industry groups estimate, compared to the amount they are currently paying — $357 million. Andy Walz, a high-level Chevron executive, predicts the regulatory change will increase gasoline prices by more than a dollar by 2030 and “cripple the survivability of the state’s remaining refineries.” Additionally, the change “will increase transportation and aviation fuel prices for consumers. It will risk significant job losses, including many high-paying union jobs, while reducing funding for essential public services. It will upend California’s fuels market and threaten critical energy and national security assets,” he said. Why it matters Thanks to California’s carbon laws, the state has already lost refineries. Last year, the Phillips 66 refinery in Los Angeles shut down. Valero is closing its refinery near Benicia this year. Marathon Petroleum’s Vice President Michael Henschen warned, “California refineries are already among the most expensive refineries to operate in the world,” and the new CARB limits “would further widen the cost disparity, forcing refineries to reconsider whether operations in California remain viable.” Closure of additional refineries threatens the 536,770 jobs around the state supported by the petroleum industry. California won’t be the only state impacted. Because of Nevada’s dependency on California’s refining, the state’s governor, Republican Joe Lombardo, wrote the Newsom administration, encouraging it to “carefully evaluate the regional consequences of the draft Cap-and-Invest regulation before final adoption.” The bigger picture California’s 13-year-old Cap-and Invest (formerly called Cap-and-Trade), which requires refineries, power plants, and large industries to buy allowances on the greenhouse gases they emit, currently adds roughly 24 cents to the price of a gallon of gasoline. The money collected by the state is used for climate programs and consumer rebates. The regulatory change was spurred by last year’s bill, Assembly Bill 1207, sponsored by Democrat Assemblywoman Jaqui Irwin. The bill renamed the cap-and-trade program cap-and-invest, extended it beyond 2030 to 2045, and directed the CARB to adjust the emission allowances annually to meet the state’s 2045 carbon neutrality goal. Refineries are not the only industries concerned about the change. “If these proposed regulations move forward, Californians should brace for higher costs across the board with no end in sight. There is still time to fix this. CARB and the Legislature must act before it’s too late,” warned California Manufacturers & Technology Association President Lance Hastings. Environmental groups carped that the regulations did not go far enough. “The oil industry is trying to slow our transition to cheaper, cleaner energy in order to protect its billions of dollars in profit,” said Caroline Jones at the Environmental Defense Fund. CARB will make its final decision in late May 2026. SUGGESTED STORIES Facing higher gas prices, California grapples with oil refinery closures Two planned refinery closures would cost California 17% of its oil refinery capacity over the next year, according to the Energy Information Administration. The closures are expected to drive up gas prices, not only in California, which often has the nation’s most expensive gasoline, but i Read more California’s anxiety is not about seams. It’s about control When institutions are confident, they don’t rush out carefully framed messaging two days before a major regional symposium. They don’t suddenly rediscover the dangers of “fragmentation.” And they don’t rely on allied advocacy groups to circulate modeling that conveniently reinforce Read more U.S. seeks overhaul of liquified natural gas regulations After two decades, the U.S. Department of Transportation is updating its rules for liquefied natural gas (LNG) facilities to support a fast-growing energy export industry. In compliance with the president’s “Unleashing American Energy” execut Read more
Facing higher gas prices, California grapples with oil refinery closures Two planned refinery closures would cost California 17% of its oil refinery capacity over the next year, according to the Energy Information Administration. The closures are expected to drive up gas prices, not only in California, which often has the nation’s most expensive gasoline, but i Read more
California’s anxiety is not about seams. It’s about control When institutions are confident, they don’t rush out carefully framed messaging two days before a major regional symposium. They don’t suddenly rediscover the dangers of “fragmentation.” And they don’t rely on allied advocacy groups to circulate modeling that conveniently reinforce Read more
U.S. seeks overhaul of liquified natural gas regulations After two decades, the U.S. Department of Transportation is updating its rules for liquefied natural gas (LNG) facilities to support a fast-growing energy export industry. In compliance with the president’s “Unleashing American Energy” execut Read more
