As Reliance on Imported Gasoline Rises, California Adapts to a ‘New World’

California’s gasoline imports over the first 10 months of 2025 have already exceeded totals for any year since at least 2004, according to Energy Information Administration data.

The higher level of imports comes at a time when Phillips 66 winds down operations at its 156,000 b/d Los Angeles refinery and Valero Energy remains on course to shutter its 150,000 b/d Benicia refinery in Northern California by the end of April.

The closures of the two plants, which account for 17% of the state’s refining capacity, is reshaping the state’s fuel market, according to analysts and traders.

“It’s going to be interesting to see where we go from here,” one West Coast market participant said. “It’s going to be a new world.”

According to the EIA data, 2025 gasoline imports into the West Coast (PADD 5) as of Oct. 24 averaged 118,580 b/d, or a total of about 35.5 million bbl.

Phillips wrapped up crude processing at its LA refinery in mid-October and said it remains on schedule to shut the facility by year’s end. And Valero officials last week said the company will shutter the Benicia plant as planned, despite efforts by California officials to persuade company officials to keep it open or find another company willing to operate it.

While the West Coast market does not typically experience sizable shipments of imported gasoline during the lower-demand period from October through March, this year has broken that pattern, the market source said.

A second West Coast trader agreed, saying “boats and boats” of imports are headed to the region.

OPIS in October reported a sharp rise in fuel tanker traffic from Asia Pacific refineries to the West Coast, with the October voyage count rising by 60% from September.

In addition, seaborne imports of finished gasoline into the region this year have more than doubled since 2023 to 13.27 million bbl, with another 1.95 million bbl expected to land at West Coast ports this month, according to data from ship tracking firm Vortexa.

Imports of alkylate, a major component of California’s CARBOB blend, have also risen from 2023 to 6.9 million bbl in 2025. That’s more than five times what the region imported in all of 2018, the Vortexa data showed.

India over the last two years has been the largest supplier to California over the last two years, sending roughly 6.56 million bbl of finished gasoline, according to Vortexa, followed by about 3.77 million bbl from Canada and 3.47 million bbl from South Korea.

So far this year, India has sent 2.94 million bbl of alkylates to California, followed by South Korea at 2.77 million bbl, The Bahamas at 524,200 bbl bbl, Taiwan, China, at nearly 411,000 bbl bbl and the U.K., which shipped 217,200 bbl).

The cost of shipping clean petroleum products on a 40,000-mt tanker from Asia to the West Coast so far this year has been below that in 2024. The cost of moving unleaded gasoline from Yoseau, South Korea, to Los Angeles this year averaged at about $41.45/mt, down from about $56.05/mt last year and $55.50/mt in 2023, according to Baltic Exchange data.

Over the last 10 years, PADD 5 gasoline imports were the lowest in 2018, when cargoes into the region were at about 8.4 million bbl, the EIA data showed.

The agency said PADD 5 imports in 2020 averaged about 9.9 million bbl.

The data also showed gasoline imports rebounded in 2021, rising by 124% from 2020 to 22.6 million bbl , followed by a 7% increase in 2022 to 23.8 million bbl.

“A lot of refineries went offline permanently because they weren’t making enough money,” Ryan Cummings, chief of staff at the Stanford Institute for Economic Policy Research, said. “Then, people were looking out in the future, saying that gasoline demand isn’t going to be that high. So it had a lot of capacity to go offline.”

Marathon Petroleum in April 2020 began closing its 157,000 b/d Martinez refinery and Phillips 66 that same year announced plans to convert its 128,000-b/d Rodeo refinery near San Francisco into a renewable fuels facility.

Cummings said the demand, which fell sharply during the Covid-19 pandemic, came “roaring back,” but the state’s refining capacity had declined as other countries built more advanced refineries.

He added that the drop in California’s refining capacity has turned California into a net importer of gasoline, leading to a situation where prices are set by the most expensive refiner abroad rather than in the state.

“Everybody talks about, ‘Oh, if we don’t have this, we’re gonna have less supply’,” he said, adding that any shortfalls will be filled by non-U.S. refiners.

Stillwater Associates President Megan Boutwell said 2024 and 2025 have been “an anomaly” for gasoline imports into California and could mean the state needs to improve its capacity to handle higher volumes of imports if that trend continues.

“There are dock facilities that, in some cases, are going to need to be totally redone,” she said. “There’s going to be a need for way more storage.”

Boutwell added that while imports will help to meet demand and won’t lead to oversupply, reliance on imports can exacerbate problems when unplanned refinery outages occur.

“Then the market gets short and you have to call South Korea, which will then take six weeks, and that creates a problem,” Boutwell said.

That occurred in early October when a fire in a jet fuel processing unit at Chevron’s El Segundo refinery sent spot prices up by more than 30cts/gal in West Coast markets, as traders were forced to turn to Northern California refineries for jet fuel.

California legislators have tried to address price volatility in the market by encouraging more in-state oil production. A bill (SB 237) was signed into law in September that would allow Kern County to issue up to 2,000 drilling permits and streamline the process of sinking new wells. The measure also requires California’s governor to temporarily suspend the state’s CARBOB gasoline blend standards during periods of sharp price spikes.

A third West Coast trader said state requirements that refiners maintain certain levels of fuel in storage will continue to squeeze fuel producers.

“What it does is it just trickles down because refiners are like, ‘Okay, California, are you doing this to us? We’ll just take it out on the consumers,” the third trader said.

The source added that the increase in imports is “the new normal for California.”

“Refiners cannot bring gasoline into California from other states, because those refineries have fuel that is not California compliant and so they have to import it,” he added.

With Valero’s Benicia plant still scheduled to close early next year, the trader said he “wouldn’t be surprised” to see the facility converted into an import terminal.

“What’s valuable for these refiners is the line they have to either the Concord gathering point or the Watson gathering point,” the trader added. “So, it wouldn’t surprise me if Valero turns Benicia into a terminal and they just import barrels.”

The U.S. economy also will play a role in determining the future of fuel imports into the West Coast, according to Carl Larry, vice president of Energy Futures Clearing at international brokerage Marex.

“If interest rates are only 5% or 4.5%, consumers can afford a more expensive fuel. Is it painful? Sure, but I can afford it,” he said.

“But if you can’t afford it, that’s when you get into [a situation] where everything comes together in a bad way.”

While gasoline demand in California is projected to continue to decline, Boutwell said she believes the rate of the descent will slow slightly during the Trump administration, making marine imports a significant contributor to the fuel supply.

Given the state’s limited import capacity by rail from refiners in the Gulf Coast Coast and Midcontinent, marine imports are going to have to be the main source, she said.

OPIS Demand Pro data showed weekly gasoline demand in the West Coast as of Oct. 11 was down 4.3% from the same period of 2024. That’s well above the 1.7% year-to-year decline estimated for the same period of last year.

West Coast liquid fuels weekly average demand so far this year is down 4.4% from 2024 and average weekly demand last year was 2.9% below 2023. That followed a 4.5% drop in 2023 from 2022’s average.

-Reporting by Shaheer Naveed, snaveed@opisnet.com and Eric Weiser, eweiser@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

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