NEW YORK, Dec 9 (Reuters) - Fuelmakers in California

could face more headwinds next year as new legislation takes

effect and refining margins remain weak, the U.S. Energy

Information Administration (EIA) said on Monday.

WHY IT IS IMPORTANT

California, the most populous U.S. state, consistently faces

some of the nation's highest average gasoline prices, leading to

an often tense relationship between the state and oil companies.

The state is geographically isolated from the Gulf Coast and

Midwest refining centers, and must produce all its own motor

fuels or import them from Asia.

However, imported fuels are likely to become a more important

source of supply for California as refineries in the state

struggle with profitability, the EIA said in an analysis on

Monday.

CONTEXT

In October, California Governor Gavin Newsom signed into effect

ABX2-1, a bill designed to prevent fuel supply shortages in the

state. The bill requires refiners to maintain minimum fuel

inventory levels and manage necessary refinery turnarounds and

maintenance in consultation with labor and industry

stakeholders, giving state regulators more control.

Shortly after, Phillips 66 announced plans to shut its large Los

Angeles-area oil refinery during the fourth quarter of 2025,

citing "market dynamics" for the decision.

Earlier this year, the refiner completed converting its Rodeo

refinery near San Francisco into a renewable diesel production

facility that no longer processes crude oil.

BY THE NUMBERS

Weaker gasoline and diesel cracks continue to weigh on

refiners. The U.S. gasoline crack spread fell to

$11.73 a barrel in September, the lowest since November 2023.

The diesel crack spread traded at $17.98 a barrel in

September, its lowest since July 2021.