U.S. refining capacity decreased during 2025

U.S. oil refining capacity dropped about 1% over the past year, according to new federal data. As of January 1, 2026, the country had 18.2 million barrels per day of refining capacity, down more than 250,000 barrels from a year earlier. Two refineries closed: LyondellBasell's plant in Houston shut down in March 2025, and Phillips 66 closed its Los Angeles refinery in October 2025. A third refinery, Valero's Benicia plant in California, was still counted as operating on paper but had actually stopped refining by March 2026.

This matters most for homeowners on the West Coast. The Los Angeles closure cut regional refining capacity by 5%, and there's little pipeline connection between West Coast refineries and the larger refining hubs on the Gulf Coast. That means the West Coast has less cushion if fuel supplies get tight, which can show up as higher or more volatile gasoline and heating oil prices in that region. The Gulf Coast, by contrast, produces more fuel than it uses, so losing the Houston refinery had a smaller effect there.

This is a fuel-supply story, not a home energy-efficiency one. It does not affect heat pump rebates, weatherization programs, or other home upgrade incentives. It's mainly a signal of how much oil the country can refine into gasoline and other fuels, and where supply might be more sensitive to disruption. Homeowners who rely heavily on gasoline or heating oil, especially on the West Coast, may want to keep an eye on regional fuel price trends given this tighter supply picture.