VALERO FIRE: A CALL TO ACTION FOR PERMANENT CLOSURE OF THE REFINERY

By Dirk Fulton, May 8, 2025

Last Monday’s Valero Refinery fire and shelter-in-place order provided Benicia residents-including Robert Semple Elementary School students and teachers- with a real time reminder that the refinery should be shut down for good while the opportunity exists.

The fire allowed us to visualize the risks we face. Beyond this, there are known risks we cannot visualize: For at least 16 years, the Valero refinery secretly polluted us with cancer-causing toxins such as benzene, toluene, and xylene—all known to cause cancer, reproductive harm and other negative health effects. After discovery, the Bay Area Air Quality Management District (BAAQMD) imposed a record-setting $82 million dollar fine against the refinery. The settlement highlighted Benicia as an “air dump” for the State of California, further tarnishing the city’s image.

The fire and secret toxic emissions are stark reminders that it would be a grievous mistake to replace Valero with another operator. When Shell Oil Martinez recently ceased operations, the refinery was taken over by another company. Since then, shelter-in-place orders have become a regular occurrence. We can avoid such a result by pursuing a modern vision for Benicia without a refinery. By doing so, we can enjoy toxic-free air, nurture healthy children and realize higher home values as the “refinery town” stigma is eliminated.

We cannot surrender to published scare tactics that closure will cause a “financial doomsday”. This is wrong. We are no longer a small 1960s town of 5,000 dependent on the Benicia Arsenal for jobs, nor are we Vallejo of the 1990s dependent on the Mare Island Naval Shipyard for economic survival. The present Benicia economy is diversified and does not rely solely on a single military installation or oil company for its prosperity. We are a commuter-oriented residential community where our 13,100 working residents commute from Benicia or work from home. Less than one percent (1%) of our city’s residents work at the refinery and fewer than 100 of Valero workers live in town. Accordingly, the predicted job loss following closure, although unfortunate, is not material to our local economy.

Proponents of the refinery, including some city officials, falsely state that the city will immediately lose $12 million in revenue if the refinery closes. This is wrong. Taxes and fees do NOT immediately vanish when a business closes, or a home becomes vacant. Real properties maintain inherent value. Valero’s property taxes should largely stay the same, as its 900 acres, infrastructure and improvements continue to hold value. Additionally, Valero has already benefited from significant Prop. 8 property tax reductions after extensive litigation with the County Assessor.  Further, any projected property tax loss should be offset by higher property taxes as post-closure, higher value homes turn over and new homes are built.

Additionally, without a refinery, there are many revenue streams available to Benicia:

1. 1. New Development Fees. On the 900-acre refinery site, new housing construction along the East 2d Street corridor and clean energy projects sited in the refinery footprint will result in millions of dollars in new development fees.
   2. Water Revenue. Valero pays the city a nominal rate of $2 million for 50% of the city’s total water supply compared to the almost $7 million that residents pay for the remaining 50% of our water supply. Accordingly, this newly available water resource once treated has a multimillion-dollar value when offered on the free market to other municipalities.
   3. UTT. The Utility User Tax (UUT) generates ongoing revenue. Since 1989, Benicia residents have paid UUT at a rate of 4%. Valero has never paid its fair share of UTT as its predecessor Exxon sued the city to receive a special rate of approximately 1%. Valero remains under a reduced rate UUT agreement negotiated in 2018. Upon closure, the refiner should be forced to buy-out of its 2018 agreement or pay fees to rectify its 35 years of underpayment, which could result in millions of dollars to the city.
   4. Increased Sales & TOT (Hotel) Taxes. Following refinery closure, Benicia will be more attractive to tourists, thereby increasing visits and business at shops, restaurants and hotels allowing the city to capture increased sales and TOT (hotel) tax.
   5. Port Tax. Port tax is a potential source of revenue for port communities. The Port of Benicia handles approximately 260,000 imported vehicles annually accounting for about 20% of California’s seaborne vehicle imports. A $50 port use fee imposed on each vehicle entering the port could raise $13,000,000.00 annually for the city. Such fee could be passed on to consumers as an inclusion in the “vehicle prep” fees common on all new car invoices.
   6. BAAQMD Funds. The BAAQMD’s Settlement Agreement with Valero provides $56 million to the city as pollution mitigation fees. The funds may be viewed as a safety net to bolster the city during the transition away from the refinery. The funds can be used to support various city projects, including refinery closure costs, oversight of environmental cleanup, assistance to schools, development of parks and open space, and the like.

In sum, to ensure clean air, healthy kids, and safe homes with rapidly appreciating values, we should heed the call to action presented by the Valero fire, envision a new modern-era Benicia without a refinery and resist scare tactics that promote its continued operation. As set forth above, the city can financially endure the transition in a just way.

Change admittedly can be challenging for all of us: I do miss Mabels, the art glass studios, Tia Theresa, the Brewery and Sam’s Harbor restaurant, but I will not miss refinery fires, secret toxic air emissions or shelter-in-place orders.

Dirk Fulton, Lifelong Benicia resident
Former Solano County Planning Commissioner, Benicia Vice-
…..Mayor, City Councilman & School Board President
Visit: www.Greatdayforbenicia.com