Impact of California Refinery Closures on Neighboring States
Limited Capacity to Directly Assist
Neighboring states—primarily Arizona and Nevada—are not positioned to compensate for California’s fuel shortages. In fact, these states are themselves heavily dependent on California’s refineries for their own gasoline and diesel supplies. Arizona has no significant oil reserves or refineries, and Nevada has only one very small refinery that does not produce transportation fuels[2]. Both states receive most of their petroleum products via pipelines from California, with some additional supply from Texas and the Pacific Northwest[2].
Regional Ripple Effects
Rather than serving as a backup, Arizona and Nevada are likely to experience collateral damage from California refinery closures:
Gasoline and diesel prices in these states already track closely with California’s, and price spikes in California quickly spill over into Arizona and Nevada[2][5].
When California refineries close or reduce output, less fuel is available for export to neighboring states, leading to regional shortages and higher prices[1][4].
Both Arizona and Nevada governors have warned that California’s regulatory actions and refinery shutdowns threaten fuel security and affordability for the entire region[1].
Constraints on Alternative Supply
The unique gasoline blend required by California (and parts of Arizona and Nevada) limits the ability of refineries outside the region to fill the gap. Few non-California refineries are equipped or willing to produce this special blend, making rapid substitution difficult[3].
Increased reliance on imports—either from the Gulf Coast, Pacific Northwest, or overseas—faces logistical hurdles, including limited Jones Act-compliant shipping capacity and port congestion[3].
Washington state’s refineries, which supply Oregon, have limited excess capacity and cannot make up for California’s shortfall[3].
Policy and Coordination Efforts
Neighboring governors have actively lobbied California to reconsider or delay new refinery regulations, highlighting the risk of regional fuel shortages and economic disruption[1].
Some policy proposals in California have included encouraging neighboring states to adopt California-grade fuel standards, which could expand the pool of compatible suppliers, but this would require significant investment and regulatory changes in those states[6].
Summary Table
Conclusion
Neighboring states cannot directly address or offset California’s fuel shortages. Instead, they are likely to suffer alongside California, with higher prices and potential supply disruptions. The regional fuel market is tightly interconnected, and California’s refinery closures will create ripple effects across the West, underscoring the lack of redundancy and the vulnerability of the current supply chain[1][3][5].
Sources
[1] California Losing One Of Its Few Gas Refineries By October ... https://arizonadailyindependent.com/2025/03/21/california-losing-one-of-its-few-gas-refineries-by-october-impacting-arizona/
[2] California Energy Policies are Affecting Gasoline Prices in Other ... https://www.instituteforenergyresearch.org/regulation/california-energy-policies-are-affecting-gasoline-prices-in-other-states/
[3] California losing another refinery, impacting AZ and NV; fuel ... https://www.brushwoodmedianetwork.com/california/news-california/california-losing-another-refinery-impacting-az-and-nv-fuel-shortages-possible
[4] Neighboring governors knock California plan to lower gas prices https://www.route-fifty.com/infrastructure/2024/09/neighboring-governors-knock-california-plan-lower-gas-prices/399453/
[5] California's Refinery Exodus | PPM Consultants | Monroe, LA https://www.ppmco.com/californias-refinery-exodus-how-regulatory-burdens-are-reshaping-the-states-fuel-market/
[6] Oil Refinery Takeovers and the Coming Supply Crisis https://stephenheins.substack.com/p/californias-dangerous-path-oil-refinery
[7] California regulations could cut supply, raise gasoline prices says ... https://www.chevron.com/newsroom/2024/q2/california-regulations-could-cut-supply-raise-gasoline-prices-says-chevron-exec
[8] As Los Angeles fires rage, states battle over effort to make oil and ... https://www.thenewlede.org/2025/01/as-los-angeles-fires-rage-states-battle-over-effort-to-make-oil-and-gas-industry-accountable-for-climate-change-harms/
[9] Governor Newsom signs legislation to restrict polluting oil & gas ... https://www.gov.ca.gov/2024/09/25/governor-newsom-signs-legislation-to-restrict-polluting-oil-gas-operations-near-schools-daycares-and-across-communities/
[10] Supply and Demand of Natural Gas in California https://www.energy.ca.gov/data-reports/energy-almanac/californias-natural-gas-market/supply-and-demand-natural-gas-california
[11] Gov. Newsom signs fuel storage bill to prevent gas price spikes https://abc7news.com/post/california-gas-prices-bill-gavin-newsom-price-hike/15428696/
[12] California Towns Are Banning New Gas Stations, and Big Oil Is ... https://nextcity.org/urbanist-news/california-towns-are-banning-new-gas-stations-and-big-oil-is-watching
[13] [PDF] CDTFA_CEC Joint Report 2024 Review of the Gasoline in California ... https://seuc.senate.ca.gov/sites/seuc.senate.ca.gov/files/cdtfa_cec_joint_report_2024_review_of_the_gasoline_in_california_and_relate.pdf
[14] [PDF] COLLABORATIVE REGIONAL FRAMEWORK https://nemaweb.org/wp-content/uploads/2023/12/Western-Petroleum-Shortage-Response-Collaborative-Regional-Framework_FINAL_09302021.pdf
[15] New California legislation misleading, Chevron exec says https://www.chevron.com/newsroom/2024/q4/new-california-legislation-misleading-chevron-exec-says
[16] Newsom's ABX2-1 Will Artificially Create a Fuel Shortage Crisis by ... https://californiaglobe.com/fr/newsoms-abx2-1-will-artificially-create-a-fuel-shortage-crisis-by-limiting-distribution-of-fuel/
[17] CA losing one of its few gas refineries by October, impacting CA, AZ ... https://blackchronicle.com/news/ca-losing-one-of-its-few-gas-refineries-by-october-impacting-ca-az-nv/
[18] California gas prices go national - POLITICO https://www.politico.com/newsletters/california-climate/2024/08/29/california-gas-prices-go-national-00176811
[19] Governor Newsom signs legislation to prevent gas price spikes and ... https://www.gov.ca.gov/2024/10/14/governor-newsom-signs-legislation-to-prevent-gas-price-spikes-and-save-californians-money/
[20] Urgent Notice: Nevada Gas Shortage Could Impact Utah Travelers https://star981.com/urgent-notice-nevada-gas-shortage-could-impact-utah-travelers/