The stacks from the Valero Benicia Refinery are seen as a pedestrian walks in a nearby neighborhood, in Benicia, Calif. (Capitol Public Radio) | Rich Pedroncelli / AP Photo
Almost everyone in Benicia has a friend, neighbor or a loved one who works at the Valero Refinery.
For the most part, Valero workers are regular folks, people with jobs of all kinds, people whose jobs have felt secure, now suddenly undercut. Our friends and neighbors have stories to tell about the closure. There are some who were planning to retire with extended benefits soon. Others who won’t have that option. Many are wondering where they will land after the refinery closes.
A friend of mine talked to a neighbor who is a good friend and a longtime refinery employee. He said they were notified by email the morning the news came out, Wednesday, April 16th, but he didn’t check his email, and was shocked to find out in a morning meeting at the start of his shift.
At the morning meeting, they were told the pending changes had a number of causes:
stricter state of California regulations
reduction in profits due to pending tariffs on oil from Canada that they use for refining
the barrel price of their refined product has fallen, which affects profitability
and the overall reduction of potential profits due to the increasing trend of fuel efficient and electric car sales.
…all signs of the times.
He wondered about the possibility of Valero restructuring, but doubted it was possible. Anyway, that wasn’t discussed at their meeting.
He said Valero almost had a buyer, but the buyer backed out because of what was seen as a lack of profitability – the same factors causing Valero to decide to close the operation.
He said that recent changes in Valero leadership felt like a signal that something big was about to happen. And speaking of signals – he’s heard that a Valero boss bought a hybrid car. But he’s worked at the refinery for more than two decades, and so this announcement came as a big surprise.
Although he will survive with a generous retirement package, he’s really concerned about younger workers. No one he knows was given any “heads up” about this decision. It came down like a thunder bolt on Wednesday, April 16th, the same day that the public learned about it.
Our hearts go out to the workers. One can hope that Valero and the City of Benicia will cooperate in planning a “just transition” – with care and compassion for employees and a deep stewardship for the land in Benicia’s Industrial Park.
The Valero refinery in Benicia on Sept. 21, 2023. The potential closure of the massive Benicia oil refinery by next April would have a huge impact on both the city’s economy and the state’s oil supply. (Martin do Nascimento/KQED)
A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.
In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.
“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”
A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.
In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.
“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”
Valero CEO Lane Riggs cited California’s tough “regulatory and enforcement environment” as the main driver behind the company’s intent to cease operations at the sprawling North Bay facility. The sixth-largest refinery in the state, it currently produces up to 145,000 barrels of crude oil a day, accounting for about 9% of the state’s production.
“California has been pursuing policies to move away from fossil fuels for really the past 20 years,” Riggs said, calling the state’s regulations “the most stringent and difficult of anywhere else in North America.”
Benicia Mayor Steve Young doesn’t disagree with the assessment, but said he wishes the company had provided more lead time.
“We need to get moving on this quickly because 12 months is not a long time given the severity of the economic impact,” said Young, noting that nearly 20% of Benicia’s $60 million budget comes from the refinery. “I think that’s part of my frustration, is how little time we have to try to plan for some kind of an alternative.”
Shutting down the facility, he added, would also be a major blow to the hundreds of residents who work there, not to mention the scores of restaurants, hotels and other businesses that provide services to those workers in this city of some 27,000 residents.
The Valero refinery is also the exclusive supplier of jet fuel to nearby Travis Air Force Base, which it delivers through a direct pipeline.
“If that is stopped, what does that mean to the base?” Young said. “Travis uses an amazing amount of fuel to fly all their planes, much more than can be easily replaced, and certainly not replaced within a year. So I think that this becomes a matter of real concern to the Defense Department and it’s potentially a national security issue.”
Valero dropped its bombshell April 16 announcement roughly six months after regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for at least 15 years. And last month, city leaders voted unanimously to impose moderate new safety regulations on the facility.
Map by Matthew Green/KQED
“I suspect that compared to other refinery operators, they’re a pretty good business operator. But they’ve also had a pretty bad track record on public safety,” said Terry Mollica, who leads a group of residents that pushed for the city’s new safety rules to increase oversight of the refinery.
But Mollica said that he doesn’t think anybody in his group is particularly excited about the possibility of the facility closing altogether.
“There would be long-term and short-term impacts on the community,” he said. “People would lose their jobs. None of us want to see that happen particularly.”
Valero has owned and operated the Benicia refinery since 2000. The refinery was originally built in 1968 for Humble Oil, later called Exxon, and began operations the following year.
Its possible closure comes amid a growing exodus of traditional oil refiners in California. Phillips 66’s refinery in Rodeo and Marathon’s facility in Martinez both recently converted operations to biofuel production. Phillips 66 also plans to close its Los Angeles-area refinery — the seventh largest in the state — later this year.
And Valero executives, in this week’s earnings call, hinted that they may also soon consider “strategic alternatives” for the company’s only other California refinery, located near Los Angeles, which accounts for more than 5% of the state’s crude oil supply.
“California is phasing out its gasoline consumption and refiners see that coming,” said Severin Borenstein, a UC Berkeley energy economist. “We should be seriously concerned about how all that gasoline supply is going to get replaced.”
California has dramatically reduced its reliance on fossil fuels in recent decades, but most residents still drive gas-powered cars and will continue to do so for years to come, Borenstein said, even though the state already has some of the highest gas prices in the nation.
Gov. Gavin Newsom underscored that sense of urgency this week in a letter (PDF) to California Energy Commission Vice Chair Siva Gunda. He urged the commission to “redouble” its efforts to ensure refiners “continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.”
“I am directing you … to reinforce the State’s openness to a collaborative relationship and our firm belief that Californians can be protected from price spikes and refiners can profitably operate in California — a market where demand for gasoline will still exist for years to come,” Newsom wrote.
A customer prepares to pump gas into his truck at a Valero gas station on July 22, 2013 in Mill Valley. (Justin Sullivan/Getty Images)
Almost immediately after Valero’s announcement, Newsom was lambasted by state Assembly Republicans, who said the potential closure was among the growing number of “real-world consequences” of [his] war on California energy producers that was “becoming clearer by the day.”
In his letter, Newsom defended two different laws he signed in the last two years that give the state more oversight of the oil industry and regulate backup supply when refineries go offline in order to prevent market irregularities. He also asked state energy and environmental officials to produce a report by July 1 on “any changes in the State’s approach that are needed to ensure adequate supply during this transition.”
“The California Energy Commission continues to be committed to working with stakeholders to explore options to ensure an affordable, reliable, and safe transportation fuel supply,” Sandy Louey, a spokesperson for the commission, said in an email in response to Newsom’s letter.
Young, whose city has long felt the health impacts of the refinery’s toxic releases, said he understands the motivation behind California’s ambitious regulations.
“I think certainly [California’s] done them for lots of good environmental reasons, and that obviously climate change is a real thing and burning fossil fuels is a direct contributor to it,” he said. “Did they go too far? I don’t want to say that. But it certainly has created an environment where oil companies feel that either they’ve been unfairly targeted or they are just seeing this as perhaps a way to negotiate some rollbacks of some of those things.”
Young acknowledged that the refinery’s closure would yield some “net benefit” to the health and safety of his community.
“And so from an environmental point of view, sure, it’s certainly possible to look at it as a silver lining,” he said. “But overall, given how quick this is unfolding, I’m certainly not celebrating it by any means.”
NEW YORK, April 24 (Reuters) – Valero Energy (VLO.N), on Thursday said it would cease operations at its 170,000-barrel-per-day San Francisco-area oil refinery next year amid worries about California’s declining fuel supplies and high gasoline prices.
The decision clarifies plans for the Benicia refinery after the San Antonio, Texas-based refiner last week announced its intent to “idle, restructure, or cease operations” there by the end of April 2026. Valero also said it had recorded a $1.1 billion pre-tax impairment related to its California refineries.
Valero CEO Lane Riggs cited challenging regulatory and enforcement environment for the decision to cease operations.
Benicia’s closure is the latest in a series of planned refinery shutdowns in the state. In October, Phillips 66 (PSX.N), said it would shutter its Los Angeles-area refinery by the end of this year. Phillips 66 last year converted its Rodeo refinery into a renewables production facility.
Gasoline prices in California are among the highest in the country due to the state’s reliance on imports to offset declining supplies.
California Governor Gavin Newsom this week told state officials to step up efforts to guarantee reliable fuel supplies for the state.
“California has been pursuing policies to move away from fossil fuels for the past 20 years, and the consequence of that is the regulatory and enforcement environment is the most stringent and difficult of anywhere else in North America,” Riggs said on Thursday during a call with analysts.
The Benicia refinery costs considerably more to maintain compared to Valero’s 135,000-bpd Wilmington refinery near Los Angeles, Riggs added.
The Benicia refinery accounts for about 9% of the state’s crude oil refining capacity. The facility processes feedstocks into products including gasoline, diesel, jet fuel and asphalt.
“Our current intent is to close the refinery,” Rich Walsh, executive vice president at Valero, said during a call with analysts. “We’ve already had meetings with the CEC (California Energy Commission) and are working with them to minimize the impacts that would result from the loss of the refinery.”
If Valero closes, or not … Benicia can hold them accountable. This is not the end of the world.
By Cathy Bennett, April 24, 2025
Cathy Bennett, Benicia
My thanks go to Steve Golub in his recent article outlining the broader perspective and potential reasons for Valero’s “possible” closer. As always, Steve is clear and concise in explaining a very complicated situation. In the wake of Valero’s sudden announcement there is a lot of finger-pointing going on, and his article wisely advises a mindful step back to see the bigger picture.
I for one, do not believe that Valero is actually going to close. I think Valero is stacking up its options in a strategic move to give itself as much wiggle room as possible for the tough decisions it must now make, due to a variety of reasons, the least of which is the
watered-down ISO. I also believe Valero benefits tremendously by these scare tactics to the public (and Benicia City Council) at the very time when decisions are forthcoming regarding fees and fines for the ISO.
The timing of Valero’s announcement, and the reckless manner it threw its employees and the city of Benicia under the bus, strikes me as a crude thumb to the nose. Another example that Valero has never been “a good neighbor”. That said I would urge everyone to resist panic. There are many layers to this onion. We must peal back each layer one at a time to expose the true underbelly of what is before us. By staying focused and examining each step, Benicia will develop a solid strategy to move forward. Benicia must hold Valero accountable for what ever decision it ultimately makes. That includes clean up of the 400 acres of potentially toxic contamination of waterfront property if it plans to close.
This is not the end of the world, nor the demise of our beloved Benicia. I trust our city council to think this through carefully, not over-react, and not capitulate to Valero’s threats. This is one more piece of evidence of the bully behavior we have been dealing with for decades.
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