U.S. refinery operator Phillips 66 announced on Wednesday that it will close its large refinery in the Los Angeles area by the end of next year, which will impact fuel supply in California and potentially further raise the state's oil prices.

Phillips 66 CEO Mark Lashier attributed this decision to 'market dynamics.' A company spokesperson mentioned that the Los Angeles plant's profits are lower compared to the company's other petroleum refining facilities.

California, the most populous state in the USA, has consistently had some of the highest gasoline prices in the country, leading to frequent tensions between the state and oil companies.

Phillips 66's exit will leave a gap in California's automotive fuel supply. Since 2020, California has already closed two other refineries, one of which belonged to Phillips 66.

The Phillips 66 refinery in Los Angeles produces 0.085 million barrels of rbob gasoline, 0.065 million barrels of diesel, and aviation fuel daily. The facility employs approximately 600 employees and 300 contract workers.

Mike Smith, the Chair of the Petroleum Negotiating Program at the United Steelworkers union, stated that the planned closure 'is a devastating loss for workers and the surrounding community.' The union intends to negotiate severance pay and benefits for affected workers.

Based in Houston, Phillips 66 is currently in discussions with real estate developers regarding the future use of the 659-acre land of the refinery, which is currently connected by two pipelines.