The Benicia Independent, by Marilyn Bardet, September 12, 2025
VALERO BENICIA REFINERY TO CLOSE? – BACK ROOM PRIVATE NEGOTIATIONS
On April 15th, Valero Energy Corp stunned our city making their “surprise” well-orchestrated announcement to the California Energy Commission [CEC] saying they intended to”idle, restructure or cease operations” at their Benicia refinery by next April. Evidently, the state was caught off guard, ill prepared for a second refinery closure, just after Phillips 66’s Wilmington refinery had announced last year that they’d be closing this year, (in fact, that closure is in progress).
So, I speculate in the dark, wondering about the state’s backroom private negotiations with the largest refiner in the USA whose profits please its investors. It’s well documented that Big Oil despises California’s extensive environmental regulations that they say impede doing business in this state. Valero tried to blame a restrictive regulatory environment including the City’s adoption of our Industrial Safety Ordinance for its reasons to opt out of refining in Benicia.
JUST A BARGAINING THREAT
But wait. Think about Valero’s position in negotiations. The law requiring refineries to report to the California Energy Commission [CEC] a year in advance of any proposed major change like closure gave Valero in particular a real advantage—a year after P66’s refinery closure that by itself wouldn’t strain the state’s gasoline supply. But if they were to threaten to end production in Benicia?
Surely Valero Corp knew the stats: stopping production at Benicia would cause a significant, though not bottomless, tanking of the state’s gasoline supply, such that consumers’ demand, while trending downward, could not be met without threatening the state’s economy: skyrocketing prices at the gas pumps, long lines for gas, empty stations—just what the all-powerful oil lobby, WSPA (“Whispa”– Western States Petroleum Association) wants us to understand.
Getting into negotiating position, Valero could demand capitulations on regulatory policy, and finesse a financial windfall to stay in business in California— with long-range implications for other oil giants’ maneuverings.
NEWSOM AND THE CEC FALLING FOR IT
After all, Valero Corp knew the governor would be very worried for his own political future as well as the state’s. He would have only four months to come up with tangible results before the end of the 2025 legislative session, which ends today, Sept 12. Newsom had quickly done his own gasoline-supply gap-math homework, and asked the CEC to advise about how to stabilize the state’s “petroleum market economy”. The CEC scrambled together an insider group of stakeholders, including environmental orgs, Benicia’s city manager, and industry reps, to put together recommendations to achieve “balance between available supply and current demand”. As it evidently turned out, the recommendations made public pivoted around the concessions that could be made to Valero to entice them to stay in business in Benicia.
In my view, Valero holds all the cards, keeping its 3 options open with no official mention of “closure”. So far, there’s no final resolution to adopt a budget that would have to incorporate the extraordinary expense of the Valero/state deal—what California tax dollars in the tens of millions will be paying so that prices at the pump will be stabilized.
IT’S ALL ABOUT A ‘JUST TRANSITION’
Think how Big Oil thinks: Valero knew their plays from the get-go: they knew the state has yet to pass “just transition” legislation; AND, the state has made clear it can’t (politically) afford to have any gap in the gas supply chain. . .
Whoever does the negotiating for the state, their hands are tied: the state had yet to adopt any clear, fair plans, policy guidance and requirements for closing refineries, for example, for ensuring thorough cleanups with full costs to be borne by the industry as Responsible Party. Right now, there are no such protections in place as called for by major environmental orgs who have worked hard to get the state to listen. The state has its tail between its legs, wagging, suckered into deal-making with an oil giant.
What does “just transitioning” mean to the Governor? What it should mean—and does mean to us—is adoption of concrete regulatory policy for moving away from fossil fuel extraction and production within the state; for health and safety protections for fenceline communities; for maintaining CEQA—the California Environmental Quality Act, the only defense of citizens’ right, within their jurisdictions, to be informed and comment on large-scale development proposals; compensating cities for fiscal and physical impacts of a refinery closure; for worker retraining within the energy sector; for the ultimate goal, namely, protecting the climate from catastrophic runaway global warming.
Big Oil very easily gambles, playing their extortionist game. Very Big Bucks will be siphoned out of state coffers to pay Valero what it considers its due as the poor victim of state regs, now under threat of evisceration by backroom deal concessions.
[See ‘California in Talks to Pay Hundreds of Millions to Valero to Stave Off Refinery Shutdown‘]
This is very ugly backroom politics indeed. What will be the time limit set for Valero’s “phase out” to closure—three years? Or…. ten? Or, will the state find another operator? And what kind of deal would that call for?
CITIZENS UNHEARD IN THE HEARING
This is what some of us from Benicia needed to hear about at the Aug 20th Assembly Oversight Committee hearing on “Transportation Fuels Transition Plan”. We needed to learn details of the state’s aim to keep the Benicia refinery operating and to voice our concerns for our own city and about state’s strategies to ensure a sufficient gas supply. There were 3-1/2 hours of presentations, mainly by the CEC, with Q&A. Benicia Mayor Young spoke for 10 minutes, speaking about the City’s estimated $8-$12 million loss of revenue should the refinery close, thus indicating his primary fear. Why was there no recommendation by the CEC to incentivize “demand destruction”— transport electrification? etc etc.
It was 5:15 p.m. by the time the public got to speak; there were only a handful of Assembly members or CEC staff left in the room. Over 40 people had lined up to testify, each given 1 minute to speak. Some had come up from Kern County to oppose more drilling near their neighborhoods. The day’s performance seemed like window dressing, all for show, with most of the assembled minds having been already made up, not apparently caring much about the fallout of negotiations for fenceline communities’ future health and safety, or how the state will ever meet its lofty climate goals.
Marilyn Bardet
Good Neighbor Steering Committee
BCAMP Board Member
BISHO Working Group
Valero Community Advisory Panel
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