As 2026 begins, many California businesses are asking the same question: Why does it still feel so expensive to operate when oil prices are supposedly coming down?

For fleet managers, quick-lube owners, contractors, and businesses that rely on fuel and equipment every day, this past year has been frustrating. On paper, global oil prices softened. In reality, fuel bills remained high, supply felt tighter, and planning became more challenging.

According to the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA), global oil supply stabilized in 2025 as demand growth slowed. But California did not feel much relief. The state’s regulatory environment, shrinking refinery capacity, and isolated fuel market kept local costs elevated. As businesses look ahead to 2026, it is becoming clear that waiting for prices to fall is no longer a strategy. Preparation, efficiency, and supply certainty matter more than ever.

2025: A Tough Year for Planning and Predictability

The global energy industry spent much of 2025 tightening its belt. Deloitte’s 2025 energy outlook reported that major oil companies made significant restructuring moves as post-pandemic demand cooled. Chevron alone announced plans to save billions through workforce reductions by 2026.

The IEA confirmed that global oil demand growth slowed to about 0.8 percent in 2025. Usually, that kind of slowdown would bring price relief. But California businesses saw little benefit.

Instead of relief, many operators dealt with continued volatility, unpredictable pricing, and growing concern about where fuel would come from next.

California’s Fuel Supply Got Weaker in 2025

While global supply stabilized, California’s fuel system became more fragile.

This year, Phillips 66 shut down its Wilmington refinery near Los Angeles. Valero also confirmed it will close its Benicia refinery in the Bay Area in April 2026. Together, these two refineries represent roughly 17 percent of California’s gasoline supply, according to research from UC Davis.

That loss is significant. CNN reported that once these closures are complete, California will have just six operating refineries statewide. With so few facilities, even routine maintenance or an unexpected outage can cause significant price swings.

Energy analyst Tom Kloza told CNN that when a state has ten refineries, losing one or two temporarily is manageable. When that number drops to six, the margin for error disappears. A single disruption could push gas prices back to $5 or even $6 per gallon. Californians saw exactly that in June 2022, when prices peaked at $6.44 per gallon.

By late 2025, the national average price of gasoline was around $2.86 per gallon, according to CNN. In California, drivers were still paying about $4.31 per gallon. Analysts cited by CNN estimate refinery closures alone could push prices up another 50 cents per gallon.

For businesses that rely on fuel daily, this kind of fragility makes budgeting and planning extremely difficult.

Why California Fuel Prices Stay High

The EIA has repeatedly explained why California fuel prices remain among the highest in the country. Several factors stack up quickly:

  • higher state and local taxes
  • strict environmental fuel requirements
  • specialized fuel blends
  • an isolated fuel market with limited in-state production

According to the EIA, Californians pay roughly $0.90 per gallon in combined local, state, and federal fuel taxes.

CNN also reported that refinery operators cited regulatory costs and uncertainty as reasons for pulling back. Valero publicly stated that California’s regulatory environment played a role in its decision to close the Benicia refinery. The state’s long-term plan to ban sales of internal combustion engine vehicles by 2035 has further reduced incentives for companies to invest in long-term refinery operations.

For businesses, the takeaway is simple. Even when global oil prices are low, California prices can still spike quickly due to supply constraints and regulations.

Lubrication Became a Bigger Focus in 2025

As fuel costs stayed high, many businesses also took a closer look at maintenance and lubrication.

According to Mordor Intelligence, the U.S. lubricant market entered a contraction phase in 2025 and is expected to decline modestly through 2030. Vehicles last longer, drain intervals are extended, and electrification is changing demand. However, lubricant revenue remains strong as businesses choose better products.

Fleet managers and service providers are increasingly shifting to higher-quality Group II and Group III lubricants to protect newer engines, meet OEM requirements, and avoid costly failures. As engines and equipment become more complex, lubrication decisions are no longer about finding the cheapest option. They are about protecting uptime, warranties, and long-term operating costs.

What Businesses Need to Prepare for in 2026

Looking ahead, 2026 brings changes that businesses should be planning for now.

Forklift Rules Begin in 2026

The California Air Resources Board confirmed that starting January 1, 2026, businesses will no longer be allowed to purchase new large spark-ignition forklifts, which include most propane- and gasoline-powered units under 12,000 pounds.

Reporting requirements begin in 2026, and phased retirement of older units follows in later years. Businesses that still rely on propane-powered forklifts are encouraged to start facility and utility planning early. Electrical upgrades take time, and waiting too long can disrupt operations.

Clean Truck Check Fees and New Oil Standards

For heavy-duty fleets, CARB confirmed that Clean Truck Compliance fees will increase again on January 1, 2026.

At the same time, lubricant manufacturers are preparing for a new heavy-duty engine oil category designed to support lower emissions and longer aftertreatment system life. According to Lubrizol industry guidance, these formulations are expected to help fleets meet stricter nitrogen oxide and particulate matter standards while extending component durability.

The Bottom Line Going Into 2026

The past year made one thing clear. Global oil prices alone no longer tell the whole story for California businesses. Refinery closures, regulation, and reduced in-state supply mean volatility is always a risk.

Businesses that stay profitable in 2026 will be the ones that:

  • Understand their exposure to fuel supply disruptions
  • Plan around upcoming regulatory deadlines
  • Align lubrication strategies with modern engine and emissions requirements
  • Move away from last-minute, reactive purchasing

Global markets may be easing, but California remains one of the most complex energy environments in the country.

If you want help navigating these changes, Greg’s Petroleum Service, your lubricants supplier, is here as a long-term partner. With decades of experience supporting California fleets, service centers, and equipment operators, our team can help you review your fuel and lubrication strategy, identify potential risks, and plan with confidence for the year ahead. Sometimes, a short conversation today can prevent costly surprises tomorrow.