Prices could rise from $4.82 to an average of $8.44 per gallon, the report said.
A report written by Professor Michael Michet of the Marshall School of Business says that regular gasoline prices could rise from an average of $4.82 in April 2025 to $8.44 per gallon by the end of next year.
The USC analysis states that refinery closures could reduce refining capacity by 21% from 2023 to April 2026, based on current demand, consumption, state regulations and other factors.
This could result in a gasoline shortage in the range of 6.6 million to 13.1 million gallons a day, Mische said.
“Reducing fuel supply on this scale resonates across multiple supply chains that affect the production, costs and prices of many industries, including air travel, food delivery, agricultural production, manufacturing, power generation, distribution, food products and healthcare,” he writes.
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Industry experts warn that gas prices will skyrocket dramatically when refineries close.
Governor urges the Energy Committee to take action
In a letter on April 21, Gavin Newsom led California Energy Commission (CEC) vice-chairman Siva Gunda, working closely with oil companies to “double the state’s efforts to ensure a safe, affordable and reliable transport fuel supply.”
Newsom directed Gunda to “strengthen” the state’s “openness to joint relationships and its solid belief that Californians can protect against price spikes and refiners.
Republican state Sen. Brian Jones, a San Diego native and a leader in the Senate minority, issued a May 6 statement citing a USC investigation and calling the refinery closure “a looming energy and economic crisis.”
“If the governor doesn’t act now, Californians will be blinded by a puncture shock and a spike in the prices of everyday items,” Jones said.
New permits have plummeted 97% over the past five years, according to data from the California Department of Conservation. The state’s new drilling permits have dropped from 2,676 in 2019 to 86 in 2024.
“Controll the damage”
Mike Umbro, founder and CEO of California Energy Science, a nonprofit advocate for the energy economy and environment, and developer of Bakersfield’s western oilfield project, told the Epoch Times that Newsom’s letter appears to be inflicting damages on the oil company.
“He is trying to control the damage to Shiva Ganda,” Umbro said.
Umbro urged the governor to take a more direct and deliberate approach by declaring an energy crisis, issuing permits for drilling, and signing executive orders that allow refineries to produce gasoline.
He praised the USC study, saying it and other independent studies are necessary to fully evaluate the oil and gas supply and ensure that there is no shortage of affordable gas in pumps for consumers.
Daniel Villazenor, a spokesman for the Governor’s Office, told the Epoch Times in response to the question that Newsom’s letter to Ganda “speaks of itself.”
CEC spokesman Sandy Louey told the Epoch Times in an email that he was “committed to working with stakeholders to explore options to ensure affordable, reliable and safe transport fuel supply.”
Louie said the concept of a state-owned refinery is “just one of the many potential options that states should consider” proposed by the CEC as a possible solution to mitigate gas price spikes in a report released last August.
In the report, the CEC identified state-owned refineries potentially providing relief to consumers, but she said it recognized many challenges to overcome, including high costs, the expertise needed to manage refiners’ operations, and how it fits into the state’s transition from petroleum fuel.
The California Air Resources Board will need to develop and submit a transport fuel transition plan by the end of the year, Louie said.
A fire broke out at the Benicia refinery on May 5th, but it disappeared within hours, according to a Valero statement.
No injuries have been reported and the cause of the fire is under investigation, the oil company said. Valero did not say whether the fire would significantly interfere with refinery production.
