EIA: U.S. Refining Capacity Begins 2026 at 2-Year Low


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- U.S. oil refining capacity dropped by more than 
250,000 bpd last year to 18.2 million bpd at the start of 2026, hitting its 
lowest point in two years, the U.S. Energy Information Administration said in a 
report published Monday (6/29).

   The capacity drop, following the 2025 closure of LyondellBasell's Houston 
plant and Phillips 66's Los Angeles facility, bumped down U.S. refining 
capacity by 1%, according to the EIA.

   But the agency also noted that the 130 refineries that remain in operation 
across the country could offset to an extent the deficit from those closures. 
This was underscored by the absolute 400,000 bpd shortfall from the combined 
shuttering of the LyondellBasell and Phillips 66 operations, which was later 
mitigated by 150,000 bpd in capacity upgrades elsewhere.

   Notwithstanding those adjustments, the loss of the Los Angeles facility 
particularly leaves the West Coast vulnerable to supply disruptions because the 
region is structurally isolated from major Gulf Coast pipelines. Consequently, 
regional market participants must rely more heavily on localized production and 
increased waterborne imports of refined products to balance West Coast 
transportation fuel demand.

   Also, the tightening of regional production capacity inherently increases 
structural price volatility whenever the remaining West Coast refineries 
undergo scheduled seasonal maintenance or unexpected operational downtime. 
Market risks could amplify with the winding down of Valero's 145,000 bpd 
Benicia facility, which began in February.
Combined, Phillips 66's Los Angeles refinery and Valero's 145,000 bpd Benicia 
facility accounted for 10% of West Coast refining capacity in 2024.




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