EIA Forecasts US Fuel Stockpiles Headed for 25-Year Low by 2026

Expected refinery closures and rising consumption are poised to drive U.S. fuel prices higher in 2026.

Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, on March 11, 2022. Bing Guan/Reuters

Two prominent U.S. refineries are currently going offline, and the U.S. Energy Department expects those closings and rising fuel consumption to reduce the nation’s petroleum stockpile by 2026.

In its February Short-Term Energy Outlook, the Department of Energy’s Energy Information Administration (EIA) forecasted in a March 3 report that inventories of the three largest types of transportation fuels—motor gasoline, distillate fuel oil, and jet fuel—will soon fall to their lowest levels since 2000.

According to the EIA, the closures will reduce U.S. refining capacity to 17.94 million barrels per day (MMbpd) by the end of next year, the lowest level since June 2022. The nation’s refining capacity has grown over the past two years.

“When combined with our forecast of growing consumption, we expect inventories for the three fuels to decline through 2026,” the EIA stated. “We forecast inventories for these fuels will end next year at 375 million barrels, the lowest since 2000 when they ended the year at 358 million barrels.”

The EIA data show that the nation’s fleet of operating refineries stands at 132. The last major oil refinery built in the United States was in 1976; but several companies, such as Valero and Marathon Oil, have completed significant expansion projects to increase capacity and production.

During a phone interview, Patrick De Haan, head of petroleum analysis for GasBuddy, told The Epoch Times that the EIA’s forecast of declining crude inventories reflects the ongoing transition to electric vehicles and challenges in the refinery industry. He said refineries in California and Texas are struggling due to stringent regulations and high operating costs, leading to potential closures.

“Refining has become a very challenging business,” De Haan said. “The [EIA] forecast just suggests that we are moving to diversify the forms of energy across the county, and that means [fewer] refineries.”

Under the California Air Resources Board’s (CARB) rigorous refinery standards, including the Low Carbon Fuel Standard (LCFS) regulation, the amount of carbon in the state’s fuel mix has displaced diesel with cleaner alternatives, raising pump prices statewide.

Last month, the state’s Office of Administrative Law rejected an LCFS mandate for refineries to create a new gasoline blend to meet the state’s climate goals. Critics of the new fuel standard say it will spike California pump prices beyond the national average by 62 percent by the end of 2025.

The planned closures of LyondellBasell Industries’ 263,776-bpd refinery in Houston and Phillips 66’s 139,000-bpd Los Angeles facility are expected to stop the slump in margins for the remaining 130 plants, the EIA said in its November Short-Term Energy Outlook.

LyondellBasell announced plans to shutter its Houston refinery at the end of 2023 to use the 700-acre space as a hub for its recycling and low-carbon business.  The chemical manufacturer, however, postponed that decision in May 2023 and delayed the closure to the first quarter of 2025.

Phillips 66 is also wrapping up the shutdown of its massive southern California refinery, which consists of two facilities linked by pipeline located five miles apart in Carson and Wilmington, 15 miles southeast of Los Angeles.

In October 2024, Phillips 66 said it had hired two real estate development firms to evaluate the future use of the two 650-acre sites. The Houston-based energy giant is collaborating with California regulators to supply gasoline, diesel, jet fuel, and other refined petroleum products to one of the nation’s busiest transportation corridors.

Once Phillips 66’s facility is shuttered, California will have only six refineries that can output at least 145,000 barrels daily and handle over 90 percent of the state’s crude oil production capacity.

In EIA’s forecast note on March 3, the agency said inventory withdrawals tend to increase wholesale and retail fuel prices because market players must meet demand by competing for a smaller pool of refinery production. As a result, the DOE’s recent outlook forecasts that wholesale refinery margins for all three primary transportation fuels in the United States will increase over the next year.

Maksin Sonin, an energy executive and fellow at Stanford University, told The Epoch Times via email that the latest EIA forecast on rising fuel prices in 2026 sends a positive message to the market, supporting energy transition efforts.

“A rise in biofuels consumption, along with a tight supply and demand for conventional jet fuel, can lead to sustainable aviation fuel (SAF) production capacity growth in the U.S. in the years to come, stimulating new investments,” said the Houston energy expert. “In the long run, energy security rests upon diversification of fuel sources.”

For the remainder of 2025, De Haan said pump prices will begin to rise soon heading into Spring Break and the beginning of the summer driving season, which lasts from Memorial Day in early May to Labor Day weekend in September.

“Spring Break travels are just ahead of us, as well as the switch over to cleaner, more expensive blends of gasoline, and refineries which will have to carry out their seasonal maintenance,” said DeHann. “So, I do think gasoline prices tend to trend higher in the spring.”

According to GasBuddy, the average price for regular unleaded gasoline was $3.04 per gallon on March 3, down $0.038 from a week ago. West Texas Intermediate futures, the U.S. premium crude, dropped $1.63, to $68.13 per barrel on the New York Mercantile Exchange due to tariff concerns.