Sky Quarry predicts fuel shortage in Nevada amid California refinery shutdowns

Sky Quarry (SKYQ) is forecasting a potential fuel shortage in Nevada. Sky Quarry reached this conclusion after conducting research prompted by the surge of inquiries to secure long term fuel supply from Nevada market participants. Sky Quarry believes that the potential fuel shortage will be caused by market challenges including production disruptions in the region, supply constraints driven by regulatory action and long-term historical uptrends in demand. The potential impact of tariffs on imported oil may also have a significant impact because both Utah and California purchase crude internationally. With Nevada importing approximately 150,000 barrels of transportation fuel daily and California supplying about 88% of Nevada’s and 33% of Arizona’s fuel needs, recent setbacks, such as the explosion and shutdown of the Martinez refinery in Northern California, along with other pending closures like Phillips 66, are tightening supply and threatening the region’s fuel stability. According to the California Energy Commission, Martinez accounts for 9.64% of the state’s refining capacity. A recent Zacks Research report confirms that while the facility’s owners plan to restart operations in Q2 2025, production will initially be limited to 50%, with full capacity expected by year-end. The situation is set to worsen as Phillips 66 plans to cease operations at its Los Angeles-area refinery by late 2025, further reducing California’s refining capacity by 9%. Adding to the uncertainty, California’s recently enacted ABX2-1 law, aimed at curbing gasoline price spikes, could further reduce the state’s refinery output or willingness to sell fuel into Nevada. Often referred to as a “gasoline island” due to its lack of multistate logistics networks and pipeline infrastructure, California is particularly vulnerable to supply shocks. The law specifically mandates that refiners maintain high levels of inventory to reduce the potential for price spikes. This law could have a significant impact on fuel availability in Nevada and Arizona as the law “may artificially create shortages in downstream markets” Proposed tariffs on imported crude oil could further tighten supply and contribute to rising fuel prices across the West. California, and by extension, Nevada and Arizona, currently imports 59% of its crude oil, fuels and blend feedstocks from outside the US, which averaged 850,000 barrels daily in 2022. Additionally, the Nevada fuel market is tightening as demand rises, driven by expanding industrial sectors like mining, which are crucial to the state’s economy and expected to grow further in 2025. As the only crude oil refinery in Nevada, Sky Quarry’s Foreland Refinery is uniquely positioned to help bridge this anticipated fuel supply gap. Currently operating below full capacity, the company plans to ramp up production in 2025, utilizing its 4,500-5,000 barrel-per-day refining capacity to stabilize the regional fuel market and capitalize on rising refining margins.