California refinery closures threaten Nevada fuel supply and prices

The closures, driven in part by California’s push toward net-zero carbon emissions by 2045, expose a structural vulnerability in Nevada’s fuel supply chain that state officials say could send pump prices sharply higher for consumers who already pay 75 cents to $1 more per gallon than the national average.

Two major California oil refinery closures are raising alarms about fuel shortages and price spikes in Nevada, which depends on the Golden State for roughly 88% of its gas, diesel and jet fuel, energy industry experts and state officials said.

Phillips 66 closed its Los Angeles-area refinery in October, and Valero has submitted notice of plans to close a Bay Area facility by April 2026. Combined, the two plants produced 284,000 barrels of oil per day — about 17% of California’s total refining capacity.

“If you limit the supply of fuel coming out of California, you’re going to see that cost increase,” said Paul Enos, CEO of the Nevada Trucking Association. “The policies that they make there have an impact (on) every citizen of Nevada.”

Price spike forecasts vary widely: some experts project increases as high as $8 per gallon, while others anticipate more modest rises below $1.50 per gallon, according to reporting by The Nevada Independent distributed through the Associated Press.

Nevada’s pipeline dependence

Almost all the gas, diesel and jet fuel consumed in the Las Vegas Valley travels through the CalNev pipeline, which runs from Los Angeles to Las Vegas and also serves Nellis and Edwards Air Force bases and the city’s international airport. A second line links the San Francisco Bay Area to Reno, and a third connects Salt Lake City to Las Vegas.

The pipeline network has proved fragile under pressure. In 2019, wildfires forced the Bay Area-to-Reno line offline. In 2023, Gov. Joe Lombardo declared a state of emergency when the CalNev pipeline was temporarily cut off. Earlier this year, wildfires again shut the CalNev pipeline.

Nevada already pays among the highest fuel prices in the country. As the national average dipped below $3 per gallon in December for the first time in four years, Nevadans continued to pay 75 cents to $1 more, reflecting the state’s near-total dependence on California-sourced fuel.

“Energy security touches every part of daily life, and waiting until fuel disruptions are visible to the public is already too late,” said Chase McNamara, Lombardo’s policy adviser on natural resources.

Lombardo forms resiliency panel

Lombardo, a Republican, has created a fuel resiliency subcommittee alongside the Nevada Commission on Homeland Security, saying it is designed to “develop long-term strategies that strengthen our infrastructure, diversify supply routes, and protect Nevada’s future.” The panel’s first meeting is expected this month and will explore options to expand infrastructure and storage, recommend emergency-response policies, and coordinate permitting for critical projects.

In 2024, Lombardo and Democratic Arizona Gov. Katie Hobbs jointly wrote to California’s Democratic Gov. Gavin Newsom calling for “bipartisan, regional communication” before California enacts legislation that carries ripple effects for Western fuel supplies.

California has passed multiple laws targeting the oil industry in recent years, including creating a watchdog to monitor companies for price gouging and authorizing state energy regulators to require refineries to maintain minimum fuel inventories. The state’s electric vehicle mandate to end new gasoline-vehicle sales has since been blocked by the Republican-led U.S. Senate.

“It’s very scary for consumers, businesses (and) families working on a tight budget,” said Miranda Hoover, state executive for the Energy and Convenience Association of Nevada, a trade group representing fuel distributors, retailers and convenience store owners.

Low-income households and small businesses — which already spend a larger share of income on transportation and have limited ability to reduce driving — are hit first and hardest by price spikes, said Caitlin Gatchalian, Nevada representative at the Southwest Energy Efficiency Project, which advocates for clean energy and transportation.

“The refinery closures in California expose a real vulnerability in Nevada’s transportation fuel system,” Gatchalian wrote in an email. “People and goods still need to move.”

Alternatives are years away

Sinclair Gas has announced it is evaluating a multiphased expansion across Western fuel markets that could supply as many as 150,000 barrels per day to Nevada and California. The company’s first phase — debottlenecking its existing Salt Lake City-to-Las Vegas pipeline — would move a projected 35,000 barrels per day from the Rockies into Nevada, with a target operational date of 2028.

Sinclair has also floated plans for a new pipeline from Salt Lake City to Reno, and a pipeline expansion between Texas and Phoenix could benefit Nevada as well, according to the Nevada Independent reporting.

Nevada’s prospects for domestic oil production offer little relief. The state produced roughly 170,000 barrels last year, negligible against U.S. national output exceeding 13 million barrels per day. Nevada lacks substantial crude oil reserves; its production peaked at more than 4 million barrels in 1990 and has declined steadily since.

California’s policy working as intended, economists say

The refinery closures align with — and in part reflect — California’s own energy policy goals. While California’s population grew 6% between 2010 and 2024, gasoline sales fell 5% over the same period, said Elliott Parker, economics department chair at the University of Nevada, Reno.

“In a sense, the California policy is working to make gas more expensive to get people to switch to electric vehicles and hybrid cars,” Parker said.

California is targeting net-zero carbon emissions by 2045. Four decades ago, more than 40 refineries operated in the state; it is on pace to have just seven by the end of 2026. High operating costs, regulatory requirements, facility conversions to bio and renewable fuels, and various state directives have reduced California’s refining capacity from 2.38 million barrels per day to 1.64 million barrels.

Parker questioned whether Nevada holds enough clout to influence outcomes across its border. With one-tenth the population of California, “I don’t think there’s much Nevada can do,” he said. “We’re a small part of the market.”

The larger question, he said, rests with Sacramento.

“Does California want to intervene to try to increase refinery capacity or do they want to say ‘Yeah, it’s kind of a good thing to have higher prices?’” Parker said.