On April 21, California Governor Gavin Newsom directed state officials to intensify efforts to ensure a stable fuel supply for the state, which has the largest auto market in the U.S. The directive, outlined in a letter to California Energy Commission (CEC) Vice Chair Siva Gunda on Wednesday, follows Valero Energy’s announcement to close or reconfigure its Benicia refinery by April 2026. The Benicia facility represents about 9% of California’s crude oil refining capacity.

California Governor Gavin Newsom looks on as he visits the United States and Mexico border, in San Diego, California, U.S. December 5, 2024.

In his letter, Newsom emphasized the need for reliable fuel access. “I write to direct you to redouble the State’s efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels,” he wrote. He noted that while gasoline demand is gradually declining, it will remain significant for years.

Newsom set a July 1 deadline for the CEC to propose strategies to manage fuel supplies during the state’s energy transition. He also encouraged the agency to demonstrate that refiners can operate sustainably in California, which has ambitious climate goals, including a ban on new gasoline-powered vehicles by 2035.

California’s fuel industry faces challenges, including high operational costs and regulatory requirements. The state relies on fuel imports from regions like Latin America and the Middle East to supplement local production, contributing to some of the highest gasoline prices in the U.S.

Newsom attributed some economic challenges faced by refiners to broader market uncertainties. However, industry representatives offered a different perspective. “Governor Newsom’s letter to the California Energy Commission directing it to ‘redouble’ its efforts to work closely with refiners so ‘they see the value in serving the California market’ is laughable and a blatant effort to cover his backside,” said Chet Thompson, CEO of the American Fuel & Petrochemical Manufacturers, in an emailed statement. Thompson emphasized that state regulations, not external factors, create difficulties for fuel producers and contribute to elevated fuel prices for California drivers.

The state’s efforts aim to balance fuel availability with its long-term environmental objectives, ensuring consumers have access to affordable and reliable transportation fuels during the transition to cleaner energy.