The West Coast Is Redrawing Its Fuel Map. Will the New Pipeline Fit? 

Bottom Line Up Front: The West Coast is losing refineries, tightening supply, and rewriting its own demand curve through some of the most aggressive fuel policy in the country. To add to the uncertainty, for the first time in a generation, a major new pipeline has reached final investment decision to bring in new supply. Stillwater’s Supply & Demand Outlook answers the question every West Coast decision rests on: how much gasoline, jet, and diesel each market will have through 2040, and how those barrels move. Alongside our Price & Margin Outlook, it completes the West Coast Fuels Outlooks: the volume side and the value side of the same market. 

A trader I know describes the West Coast as an island whose coastline keeps moving. He isn’t wrong. PADD 5 sits behind the Rockies, so it has always had to balance itself, refinery by refinery, cargo by cargo. What’s different now is how fast the map is changing. Three forces are redrawing it at once:  

1. refineries are closing
2. climate policy is destroying demand and reshaping supply
3. new pipeline capacity has committed shippers and the potential to redraw regional supply  

Each of these forces moves the balance point; together, they make the old rules of thumb obsolete. If you want to get ahead of that, you first need to know how much product each market will have and where it will come from. That is what Stillwater’s Supply & Demand Outlook is built to tell you. 

Policy is reshaping demand faster than the barrels can adjust

No market on the continent is bending its own demand curve harder. California’s Low Carbon Fuel Standard requires roughly a 24% cut in transportation-fuel carbon intensity today, with goals of 90% by 2045. Oregon’s Clean Fuels Program targets a 37% reduction by 2035; Washington’s Clean Fuels Standard, 45% (and potentially 55%) by 2038. Layer in zero-emission-vehicle (ZEV) adoption and improving fuel economy, and gasoline and diesel demand are being destroyed rather than merely slowed. Policy is driving the market more than economics.  

The climate programs shrink demand and change what flows where. Renewable diesel (RD) and biodiesel (BD) are set to displace more than 95% of fossil diesel across California and the Pacific Northwest. Petroleum diesel that used to clear locally now looks for the export dock, while on the gasoline side, falling demand and shifting ethanol blending are redrawing how product moves across the West Coast. Jet is the exception, growing steadily and outrunning local production. 

And the whole trajectory rests on an unsettled question. California’s Advanced Clean Cars II (ACC II) mandate lost its federal waiver to a Congressional Review Act repeal in 2025 and is now stuck in litigation.1 The low-carbon schedules that Washington, Oregon, and California are counting on are difficult to hit unless ACC II survives and ZEV sales accelerate. The demand curve, in other words, currently runs through the courtroom. 

Refineries are leaving, but what will replace the lost supply?

On the supply side, the ground is moving just as fast. California crude production fell nearly 30% between 2019 and 2024, pushing supply toward higher-cost waterborne imports. A wave of closures and biofuel conversions, including Valero’s Benicia refinery and Phillips 66’s Wilmington site, has stripped gasoline and jet production out of the system faster than demand has fallen. For now, Phillips 66 and Valero have kept importing gasoline to meet contract obligations, but neither has committed to running its shuttered site as a long-term import terminal. The region is leaning harder on marine imports without yet knowing what the permanent supply backbone looks like. 

Into that uncertainty comes the first major new artery in decades. Kinder Morgan, Phillips 66, and HF Sinclair reached final investment decision on the Western Gateway Pipeline in August 2026: a new-build from Borger, Texas, to Phoenix (230 kbd) paired with a reversal of the Santa Fe Pacific Pipeline (SFPP) West Line from Phoenix into Colton, California, targeted to start in 2029. It has committed shippers and a final investment decision behind it; permitting, potential legal challenges, and construction lie ahead. 

As California rebalances, does gasoline stay short or swing to length, does jet keep leaning on imports or turn domestic, and which way does the diesel pool tip? The answers reshape the market and how much new pipeline capacity the region needs. Providing insight into these kinds of issues is what Stillwater’s Outlooks are built to do. 

The questions our clients are working through now

Stillwater’s West Coast Fuels Outlooks (including the dynamic duo of our Supply & Demand Outlook plus our Price & Margin Outlook) earn their keep when a decision is on the line. These are the questions we are helping clients get ahead of right now: 

• How short does California stay, and for how long? As closures outrun demand destruction, how much product must still arrive by water, and when does that reverse? 
• Who supplies Arizona and Nevada? The inland desert markets have no refining of their own. Do they stay tied to California, or does the Western Gateway Pipeline redraw their supply map? 
• Where do the barrels California no longer uses go? Displaced petroleum diesel and increasingly long gasoline must clear somewhere – the Pacific Northwest, export docks, or the desert. 
• Does the Western Gateway Pipeline get used as advertised? Committed shippers point one way, but the price signal may point another. 
• How fast does ZEV policy actually bite? The pace of ACC II litigation and ZEV adoption swings the demand curve and every balance that follows from it. 

Balances are the first half of the decision

Knowing whether a market will be long or short is where every West Coast decision starts, but it isn’t where the decision ends. The Supply & Demand Outlook tells you how much product each market has and how it flows. Its companion, the Price & Margin Outlook, tells you what those conditions mean for prices and refining margins. Offered together as the West Coast Fuels Outlooks (and also available on their own), they cover gasoline, jet, and diesel across Southern California, Northern California, the Pacific Northwest, and the desert markets of Arizona and Nevada, under a Base Case and a Western Gateway Pipeline case, with additional scenarios available as an add-on. 

In Summary: The West Coast is closing refineries, rewriting demand through some of the most aggressive fuel policy in the country, and, for the first time in a generation, building a new supply pipeline, even as the price signal that would justify it is still forming. If you are weighing an investment, an acquisition, or a position in this market, Stillwater’s Supply & Demand Outlook was built to make that decision simpler. Explore the full suite on our West Coast Fuels Outlooks page or contact us to learn more.