Analysis: USWC Refineries Key to Summer Jet Fuel, Gasoline


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- Refinery closures and operational disruptions across 
California are tightening fuel supply along the West Coast, with market 
participants increasingly tying refinery reliability to historic jet fuel 
premiums and gasoline already at above $5 gallon ahead of summer travels.

   The shift is becoming more visible as major refineries wind down operations 
and fuel prices surged steadily from the conflict in the Middle East.

   As of Thursday (4/16), the basis for prompt Los Angeles jet fuel traded at a 
historic $1 premium above May NYMEX ULSD futures, surging 42cts over three 
sessions. Market participants noted tightening regional supply from refinery 
capacity declines and demand for aviation fuel building ahead of the peak 
travel season.

   West Coast gasoline, meanwhile, averaged $ $5.377 gallon for the week ended 
April 13, up 45% on the year, as per U.S. Energy Information Administration 
(EIA) data.

   The price gains coincide with Valero Energy's progress with plans to idle 
refining operations at its 145,000 bpd Benicia refinery through a phased 
approach, beginning with processing units earlier this year. The company said 
most refining units are expected to be properly idled by April 2026 following 
mandatory state inspections that could not be deferred.

   Valero added that the Benecia refinery will continue producing gasoline 
while working down inventories and anticipates importing additional gasoline 
volumes into the Bay Area to help meet contractual supply obligations during 
the transition. The company also said it is evaluating long term strategic 
options for the facility while offering employees transfers to other locations 
or outplacement support.

   The Benicia shutdown follows the earlier closure of Phillips 66's 139,000 
bpd Los Angeles refinery, together removing a substantial share of refining 
capacity from California's already tight fuel system. Market participants say 
the loss of capacity has reduced the region's flexibility to respond to routine 
disruptions.

   Flaring Worry

   Operational reliability has also come into sharper focus. The latest flaring 
event on the West Coast occurred March 18, 2026, when PBF Energy reported an 
unplanned activity at its 155,000 bpd Torrance refinery tied to a utility power 
failure that temporarily halted operations for a portion of the plant.

   While the incident was resolved, traders say repeated flaring events are 
becoming more consequential as fewer refineries remain online to offset supply 
interruptions.

   "We ought to expect even more flaring and price volatility and refinery 
closures," a Los Angeles jet fuel trader said, noting that refinery dynamics 
were directly influencing prices.

   The broader concern is that reduced refining capacity could make fuel 
markets more sensitive to disruptions during periods of high demand.

   The EIA has warned that declining in-state production will increase reliance 
on imported fuel supplies, introducing more logistical risks and cost pressures 
to the system.

   For California travelers, that may translate to higher airline ticket prices 
and costlier fill-ups at gas pumps this summer.

   With fewer refineries operating and operational disruptions becoming more 
impactful, analysts say refinery conditions, not just crude prices, were 
increasingly shaping the outlook for West Coast fuel markets in 2026.

    




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