U.S. refinery capacity falls as key plant closures bite in 2025

U.S. Energy Information Administration data show operable refinery capacity fell to 18.2 million barrels per calendar day on January 1, 2026, down more than 250,000 b/cd, or about 1%, from a year earlier.

The decline followed the shutdown of two plants that hit the system in 2025. LyondellBasell ended refining operations at its 263,776-b/cd Houston refinery in March, and Phillips 66 stopped operations at its 138,700-b/cd Los Angeles-area refinery in October. Together, those closures accounted for about 400,000 b/d of reduced operable U.S. refinery capacity, partly offset by small gains elsewhere. EIA’s prior annual report had put U.S. operable atmospheric distillation capacity at 18.4 million b/cd on January 1, 2025, essentially unchanged from the previous year.

In June 2025, the Short-Term Energy Outlook projected wider refining margins as shrinking U.S. refinery capacity extended through 2026 and linked lower refinery capacity to less downward pressure on gasoline prices from cheaper crude. The same outlook put California on track to lose 17% of its oil refinery capacity over the following 12 months because of two planned closures, raising the risk of higher gasoline-price volatility on the West Coast.

For biofuels, the tighter refinery base intersects with an already lean distillate market. The June 2025 Short-Term Energy Outlook put reduced renewable diesel and biodiesel supply behind a 17%, or about 22 million-barrel, draw in U.S. total distillate inventories in the first half of 2025.

Marathon Petroleum’s Galveston Bay refinery in Texas was the largest U.S. refinery on a barrels-per-stream-day basis in the January 1, 2025 report, at 665,000 b/sd. The 2026 tables break out capacity by state, district and individual refinery.