Motorists in California may soon experience a drop in gas prices thanks to a newly announced mega-pipeline project aimed at increasing fuel supply to the state.
Phillips 66 and Kinder Morgan recently revealed that the Western Gateway pipeline project is progressing, especially important after several refinery closures.
“The feedback from our recent open season shows how crucial the Western Gateway is for the region’s long-term fuel logistics,” noted Mark Lasher, CEO of Phillips 66.
This extensive pipeline, once fully operational, will stretch from St. Louis, Missouri, and is expected to transport 200,000 barrels of oil per day to Phoenix. This move should compensate for the 125,000 barrels of fuel Arizona currently imports from California, allowing that fuel to stay within the state.
As gas prices continue to rise, this news might be a welcome relief for drivers, particularly in Los Angeles, where gas costs hit an average of $5.92 per gallon recently.
The U.S. Energy Information Administration (EIA) highlights that Arizona and Nevada depend heavily on California for oil supplies. The Western Gateway Pipeline seeks to counteract diminishing refining capacity in California, which could see a production drop of up to 20% by mid-2026.
This new pipeline will run alongside an existing El Paso pipeline, drawing product from refineries located in central U.S. states and the Gulf region, such as those in Houston and Port Arthur.
“Utilizing our current infrastructure allows us to seize growth opportunities in both Arizona and California markets,” said Kim Dunn, CEO of Kinder Morgan. “Our established pipeline assets are uniquely suited to deliver a sophisticated transportation solution.”
Planned maps outline the pipeline’s route from Borger, Texas, to Phoenix, integrating with Kinder Morgan’s current pipeline to reverse flow into California.
While the project is slated for completion by 2029, it’s still dependent on final agreements and board approvals.
California’s unique predicament arises from its limited pipeline connections, relying mainly on imported oil and local refineries. Increasing access to oil might prove beneficial.
In recent years, several large refineries in California have closed or are in the process of shutting down, contributing to surging gasoline prices. Governor Gavin Newsom’s environmental policies have added to the situation, with some voices warning that prices could surpass $8 a gallon.
Drivers in California are often hit with a “California premium” that reflects higher state taxes, fees tied to climate initiatives, and the costs of a specialized fuel blend made to reduce pollution, which is only produced locally and in select Asian countries.
Last year, the significant Phillips 66 refinery in the Los Angeles area ceased operations, which has compounded pressure on fuel prices.
Phillips 66 cited waning gasoline demand and soaring costs, along with the challenges of California’s strict fuel regulations, as reasons for the closure.
Governor Newsom’s office expressed cautious optimism about the Western Gateway project, recognizing it as a potential avenue for increased gasoline supplies and market stability. Yet, he reiterated the commitment to reducing the state’s reliance on oil, given its ties to volatile global markets.
The Journal has reached out to relevant stakeholders for additional comments.
