Phillips 66 to Shut LA Oil Refinery, Ending Major Gasoline Output Amid Supply Concerns
(Reuters) — Phillips 66 said it will shut its large Los Angeles-area oil refinery late next year, delivering a blow to California's fuel supply amid complaints about the state's high prices.
Phillips 66 CEO Mark Lashier cited "market dynamics" for the decision. The Los Angeles facility provides lower profits than other oil processing plants, a spokesperson said.
California, the most populous U.S. state, consistently experiences some of the nation's highest average gas prices, leading to an often-tense relationship between the state and oil companies.
Phillips' exit will leave a hole in California's motor fuel supply, which has seen two other refineries close since 2020, including one by Phillips.
The Phillips 66 Los Angeles refinery produces 85,000 barrels per day of gasoline and 65,000 barrels per day of diesel and jet fuel.
The announcement came a day after California Governor Gavin Newsom signed a bill requiring the state's oil refiners to maintain minimum fuel inventories, and authorizing the state's Energy Commission to ensure that refiners have a plan to prevent shortages during maintenance outages.
California is geographically isolated from U.S. Gulf Coast and Midwest refining centers, and must produce all its own motor fuels or import them from Asia. Motorists this week are paying about 46% more per gallon for gas than the national retail average of $3.20, according to AAA.
Phillips earlier this year converted its Rodeo, California, refinery to producing renewable diesel from fats, vegetable oils and greases from making gasoline and diesel from crude oil.
Marathon Petroleum in 2020 stopped producing fuels at a refinery in Martinez, California, citing poor profits.
The Los Angeles facility employs about 600 Phillips 66 employees and 300 contractors.
Mike Smith, chair of the United Steelworkers oil bargaining program, said the planned closing "is a devastating loss for workers and the surrounding communities." The union intends to bargain for severance pay and benefits for affected workers.
Houston-based Phillips 66 is discussing with real estate developers the future use of the refinery's 659 acres now occupied by two facilities connected by a pipeline.
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