Flaring, Refinery Woes Tighten California Gasoline Market

California’s gasoline market remains on the edge as refinery flares and outages tighten supply and push premiums higher.

According to U.S. Energy Information Administration data, disruptions at two 157,000 bpd refiners — one belonging to Valero and the other PBF’s Martinez — along with maintenance issues at Chevron’s 290,000 bpd El Segundo refinery have left inventories stretched, forcing heavier reliance on imports.
In recent weeks, unplanned flaring has further unsettled the market. On September 19, 2025, PBF Energy’s 166,000 bpd Torrance refinery began flaring; the cause is under investigation, with no estimated stop time.

As a result, on September 22, Los Angeles CARBOB basis traded at +54 cents to October NYMEX RBOB futures ,  widening its premium to +74 cents. A trader said: “Anytime a refinery goes offline in California, even briefly, the market reacts fast.”

Major capacity losses compound the problem. The Martinez refinery remains offline after a February fire; Valero has filed to cease operations at Benicia by April 2026; Chevron’s El Segundo has several units under repair; and Phillips 66 is preparing to shut its Wilmington refinery later this year.

EIA estimates California may lose 17% of its refining capacity within the next year. Inventories are thin; the state is importing more fuel than in recent years to make up the gap often at a premium because supply must meet strict fuel specifications.

Gov. Gavin Newsom weighed in at an appearance in Sacramento on September 10, releasing a legislative deal aimed at stabilizing prices and supply.

Said Newsom: “After months of hard work with the Legislature, we have agreed to historic reforms that will save money on your electric bills, stabilize gas supply, and slash toxic air pollution all while fast tracking California’s transition to a clean, green job creating economy.”

For West Coast gasoline, this also raises uncertainty with the market already being strained by flaring and unit outages. At the same time, the state’s leadership is pushing for a future of less gasoline demand and welcoming renewable clean energy.

California’s gasoline market often gets relief in fall and winter when demand drops, and the switch to cheaper winter blend gasoline typically lowers wholesale and retail prices.

In past winters, wholesale CARBOB has trended toward seasonal lows when refinery operations are smooth. For example, in early 2016, LA CARBOB briefly became among the cheapest spot gasoline regions nationally, during a calm winter period.

History also shows, however, that fall maintenance and unexpected outages frequently spoil this relief in California.

When refinery disruptions coincide with seasonal demand growth, price spikes happen even when demand is cooling.