One Way to Avoid Gasoline Lines in 2026
It’s well known by now that California’s refinery capacity is stretched to the limit. The state’s total crude oil consumption last year was 1.40 million barrels per day, with daily refinery capacity at 1.62 million barrels per day. When accounting for downtime for maintenance and accidents such as the fire in the PBF refinery in Martinez, that’s a thin surplus. But with the announced closure of Phillip 66’s Long Beach refinery and Valero’s Benicia refinery in 2026, production drops to 1.34 million barrels per day.
How will this affect our supply of gasoline?
According to the California Energy Commission’s report “California Refinery Inputs and Production,” the highest gasoline production week by our state’s refineries over the past few months was 6,190,000 barrels during the week ending 5/16. That equates to a maximum capacity of 884,000 barrels per day. Taking into account the 10 percent ethanol requirement, that means about 50 percent of current crude oil inputs come out as gasoline. The rest is used for other products, and industry experts claim it is not possible to increase the ratio of gasoline as a percent of total crude oil processing by more than one or two percent. Our refineries are maxed.
So far, however, we are ok. At 42 gallons per barrel, gasoline production at 6.2 million barrels per day equates to an annual production of 13.5 billion gallons, which just barely exceeds reported demand in 2024 of 13.4 billion gallons. But by the end of 2026, California’s refinery capacity will drop by 18 percent. Gasoline production will not come anywhere close to meeting demand.
A June 2025 report from Stillwater Associates offers a lucid analysis of past and future gasoline demand trends in California. It attributes the reduction in statewide gasoline demand since 2000 as a function of the retail price per gallon tripling, “prompting Californians to seek out more fuel-efficient vehicles, leading to a 23.5% improvement in median vehicle fuel economy and the nation’s highest ZEV sales.” But the author, Gary Yowell, warns us that gasoline sales “follow a gradually shifting trend, with rare exceptions.” He presents a gasoline demand scenario over the next 15 years that, based on the historical rate of decline, projects a modest drop from around 13 billion gallons per year in 2025 to 11 billion gallons per year in 2040. On the same chart, he depicts a projected drop down to 8 billion gallons per year by 2040 if the state achieves its stated goals to force compliance with their “Advanced Clean Cars II (ACC2)” directive, which is California’s regulatory framework designed to accelerate the transition to zero-emission vehicles (ZEVs).
While the reader may decide which of these scenarios is more realistic, what is indisputable is the short term crisis. Yowell projects an acute gasoline shortage in 2026, potentially not resolving until sometime after 2030. A related March 2025 analysis by USC’s Michael Mische predicted this impending shortage could drive the retail price of gasoline in California to over $8.00 per gallon.
How this shortage can be resolved is causing some urgent discussions in Sacramento, but Yowell, a mechanical engineer specializing in automotive engineering, ventures a compelling recommendation. He points out that California’s gasoline specifications, designed to reduce vehicle pollution in the 1990s, today are unnecessarily restrictive. In particular, the California Reformulated Gasoline standards, implemented in three phases starting in 1992, can be relaxed to the federal clean gasoline standards because vehicles manufactured ever since 2000 are so clean that, as Yowell explained, “vehicle emissions have been reduced 98 percent from 1990 levels even using federal fuel. Furthermore, a good portion of California’s Clean Fuel Regulations reduced the (1-2 minute) cold start emissions, which were large emissions. Today’s gasoline vehicles have reduced cold start emissions to 10-15 seconds, greatly reducing California’s ‘Clean Fuel’ specifications benefits.”
If these obsolete fuel standards were relaxed to federal standards, Californian refineries could for the first time in decades import refined gasoline either overland by rail (there are no pipelines into the state) or oversea by tankers. But a major impediment to making up the supply deficit would be gone.
The EV solution cannot offer relief in the short run. According to the U.S. Department of Energy, of the 30.8 million cars and light trucks on the road in California, only 1.6 million are “BEVs,” that is, pure battery-electric vehicles and not including plug-in hybrids that combine gasoline and electric propulsion. Sales of EVs in California have plateaued over the past two years, and while $8.00 per gallon gasoline will stimulate sales, as we estimate in WC#89, our in-state EV fleet would have to triple to offset gasoline demand enough to make a difference.
Californians pay the highest prices in the nation for almost everything that is essential to household prosperity – gasoline, electricity, and homes. While there are environmental motivations for some of these premiums imposed by state regulations, many do not take into account new technologies or the disastrous impact they can have on working families. Perhaps California’s unique gasoline reformulation requirement is something for which the need has come and gone.
Even if state agencies make this change, they still have to reevaluate all their policies impacting California’s oil industry. From drilling to distribution to refining, the regulatory environment is driving major operators to shut down and relocate. Exporting our environmental footprint – along with good jobs – is expensive and hypocritical. We can do better.
Edward Ring is the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe.