Chevron is warning that proposed changes to California's cap-and-invest climate program could force the closure of its El Segundo refinery, a cornerstone of the city's economy since 1911.
Chevron executive Andy Walz told FOX 11 Los Angeles during a tour of the facility on Wednesday, July 16: "The company may be forced to shutter the refinery if over regulation in CA persists."
Days later, Chevron formalized the threat. In what MB Weekly reported Tuesday, July 22, as a letter to Gov. Gavin Newsom and the California Air Resources Board, the company said the proposed cap-and-invest amendments threaten the "survivability" of California's refining industry. Chevron warned the rules would risk thousands of high-paying union jobs statewide and raise transportation and aviation fuel costs for consumers.
The El Segundo refinery processes more than 276,000 barrels of crude per day, which Chevron says makes it the largest producing oil refinery on the West Coast. It produces roughly one-fifth of Southern California's motor vehicle fuel and supplies 40% of the region's jet fuel, according to the Los Angeles Times. The facility sits four miles from LAX and covers about 1.5 square miles, according to FOX LA. The city itself was named for it — "El Segundo" is Spanish for "the second," a reference to Standard Oil's decision to build its second refinery there in 1911.
PBF Energy Inc. echoed Chevron's concerns, cautioning regulators that the cap-and-invest changes could drive all seven of California's remaining refineries out of business. Two major refineries have already shut down in recent years: Valero's Benicia facility and Phillips 66's Los Angeles refinery, which closed in 2025.
What changed at CARB
The California Air Resources Board voted 10-3 on Thursday, May 29, to approve a sweeping overhaul of the cap-and-invest program. The update removes 118 million carbon allowances from the market by 2030 and 900 million after 2030. It also created a new Manufacturing Decarbonization Incentive that was expanded just six weeks before the vote to include petroleum refining.
CARB chair Lauren Sanchez said at the May 29 meeting that "the work does not stop here with this vote," adding the board would pursue additional analysis and guardrails on the manufacturing incentive.
The overhaul is already drawing legal fire. Communities for a Better Environment filed a lawsuit on Wednesday, July 1, in Los Angeles County Superior Court alleging CARB bypassed required environmental review.
The lobbying backdrop
Chevron spent $3.7 million lobbying Sacramento in the first quarter of 2026, according to California Secretary of State filings. The Western States Petroleum Association spent $4.3 million in the same period.
California's Legislative Analyst's Office has warned the cap-and-invest amendments could cut Greenhouse Gas Reduction Fund revenues roughly in half, dropping from about $4 billion annually to $2 billion in future years.
What's next
The legislative session ends in August 2026, and Greenhouse Gas Reduction Fund spending priorities remain unresolved. No specific CARB hearing date or public comment deadline for the cap-and-invest rulemaking has been announced. Residents can contact state Sen. Ben Allen, who represents El Segundo, through his Sacramento office.
Whether the refinery stays open may hinge on what happens in those final weeks. The Legislative Analyst's Office revenue projections suggest both sides have billions at stake.
