Phillips 66 is set to commence the permanent closure of its Los Angeles-area refinery complex in September 2025, marking the end of an era for a facility that has been a fixture in the region for over a century. The company announced its intention to wind down operations at the Wilmington and Carson sites, a decision driven by a confluence of factors including declining profitability, evolving market dynamics, and the challenging regulatory landscape in California.
A Strategic Pivot: Why Phillips 66 is Closing Its Los Angeles Refinery
The decision by Phillips 66 to cease operations at its Los Angeles refinery, a 139,000-barrel-per-day facility, reflects a broader strategic recalibration within the energy sector. Sources indicate that the refinery’s profitability has been challenged relative to other assets in the company’s portfolio. Furthermore, growing uncertainty surrounding future demand profiles for refined petroleum products and the increasing regulatory burden in California have made long-term capital allocation to the site difficult. The company’s chairman and CEO, Mark Lashier, stated that the long-term sustainability of the Los Angeles Refinery was uncertain and affected by market dynamics, acknowledging the significant impact on its approximately 600 employees and 300 contractors.
The Legacy of the Los Angeles Refinery and Its Community Impact
Established in 1919 in Wilmington, the refinery complex, which also includes operations in Carson, has been a substantial contributor to the Southern California economy and fuel supply for decades. Producing vital transportation fuels like gasoline, diesel, and jet fuel, it accounted for about 8% of the state’s gasoline production and 17% of its total refining capacity. The closure will lead to the layoff of most workers by December, with some retained for transition duties or transferred to other company facilities, such as the Los Angeles marine oil terminal. Los Angeles County officials are working with local partners to provide job placement resources, hiring fairs, and training for the affected workforce, many of whom are skilled trades professionals.
Redevelopment Plans and the Shift to Renewable Fuels
Phillips 66 is not exiting California but is repositioning its West Coast operations. The company is actively engaged with leading land development firms, Catellus Development Corporation and Deca Companies, to evaluate the future use of the 650-acre sites in Wilmington and Carson. The proposed redevelopment plans for the Wilmington property include transforming the site into a mixed-use complex featuring extensive industrial warehouse space, retail establishments, restaurants, and recreational areas, including sports facilities and open green spaces. This move aligns with the company’s increasing focus on renewable fuels, exemplified by its Rodeo Renewable Energy Complex in the San Francisco Bay Area, which converts waste oils and other feedstocks into renewable diesel and sustainable aviation fuel (SAF).
Market Implications: Fuel Supply and Price Stability Concerns
The closure of the Los Angeles refinery, alongside other planned refinery shutdowns in California, is poised to significantly impact the state’s fuel supply and pricing. With the loss of the Phillips 66 facility, California will become more reliant on imported fuels from Asia and Europe, increasing vulnerability to transportation costs and geopolitical tensions. This dependency could exacerbate existing price volatility, with California’s retail gas prices already averaging above the national average due to factors like regulatory compliance costs. The California Energy Commission and state leaders are exploring measures to ensure adequate fuel supply, though concerns about price surges and potential supply crunches remain a trending topic in current los angeles news.
Broader Energy Transition Trends
This development is emblematic of larger shifts occurring within the energy industry, driven by climate goals and the transition to cleaner energy sources. As California continues its push toward decarbonization, policies encouraging renewable fuels and electric vehicles are reshaping the traditional refining landscape. The closure of legacy assets like the Los Angeles refinery, while presenting challenges for the workforce and immediate fuel supply, also opens opportunities for repurposing land for sustainable industries and advanced manufacturing, reflecting the complex dynamics of the ongoing energy transition.
